Obtaining Business Lines of Credit To Fund Your Business
Let’s say your business needs a capital infusion. Things are going well, but you need extra cash to expand, hire new employees, make improvements, increase marketing – whatever. Where do you turn to get the cash you need? Can you leverage your business to fund your goals? And how do you do it? Actually, there are more ways of getting funding than you probably thought.
Assuming your business is in good shape, pays its bills promptly, has a good cash flow, and is professionally managed, you have a lot of options. You can probably narrow down the list by scratching off Venture Capitalists and Angels. The former are only interested in lending you money if you plan to go public at some point. Angels (not the celestial kind!), might be interested if you have a lock on the, “next big thing,” but only if the payoff is calculated in the tens-of-millions of $$. You may not be quite there yet.
What does that leave? One valuable option is to start creating a business credit profile for your business. Creating a business credit profile can be done easily and can offer any number of business loans, from Working Capital, to Lines of Credit, to Construction, to Term Loans, to even business credit cards. If you already have a good working relationship with your Business Loan Officer, this is probably the first place to look, once you have your business credit profile in place. They know you, and you’ll be able to skip much of the red tape. This makes sense a lot of the time. But hold on! You have quite a few other options available.
Business credit cards, for example. All major business credit card companies have branched into commercial lending. Obtaining cash from this method is usually easier than other sources. However, this method of financing still needs an established business credit profile. Because lending institutions don’t lend money to sole proprietors. That’s called a personal loan. This is one option to be considered. Business credit cards can be useful in many ways and have reasonable interest rates as well. Once you have established your business entity, you will be receiving numerous offers from business credit card companies to apply. This is a great way to have access to capital. Remember that your business credit cards do not show up on your personal credit report. So any business debt that appears on your personal credit can be transferred to your business credit card, freeing up your personal debt to income ratio. This will increase your personal credit score almost immediately. Many times the credit card companies will offer 0% interest for a limited time (I’ve seen up to one year), then have a reasonable interest rate afterwards (anywhere from 8-14%). That’s far better than a hard money lender or private lender.
Then there’s unsecured lines of credit. The objective is to stimulate micro-enterprises and provide unsecured loans of up to $50,000 to small businesses. You can apply for unsecured lines of credit through your bank or many other institutions that offer them. Once again your business credit profile will need to be in place. Typically, an unsecured line of credit has an interest rate of Prime plus one or two points, depending on some factors that are taken into account. But the bonus here is that the money is unsecured which means you don’t have to put up any collateral for it. This type of lending does not require any financial statements as well. This gives you flexibility especially if your business doesn’t have a great cash flow yet. This is a great method for obtaining capital for your business whether it’s to expand, advertise, or market a new idea.
Pat Gage, The Opportunity Creator, and a leading expert in the field of business credit has helped a number of clients target his specialty, starting, expanding, and growing their businesses through his trademarked 10 Steps to Money System. The Opportunity Creator is not only a sought after business credit coach but also a national speaker. For more information on any topic discussed, visit Gage’s site at http://www.10stepstomoney.com/
Let’s say your business needs a capital infusion. Things are going well, but you need extra cash to expand, hire new employees, make improvements, increase marketing – whatever. Where do you turn to get the cash you need? Can you leverage your business to fund your goals? And how do you do it? Actually, there are more ways of getting funding than you probably thought.
Assuming your business is in good shape, pays its bills promptly, has a good cash flow, and is professionally managed, you have a lot of options. You can probably narrow down the list by scratching off Venture Capitalists and Angels. The former are only interested in lending you money if you plan to go public at some point. Angels (not the celestial kind!), might be interested if you have a lock on the, “next big thing,” but only if the payoff is calculated in the tens-of-millions of $$. You may not be quite there yet.
What does that leave? One valuable option is to start creating a business credit profile for your business. Creating a business credit profile can be done easily and can offer any number of business loans, from Working Capital, to Lines of Credit, to Construction, to Term Loans, to even business credit cards. If you already have a good working relationship with your Business Loan Officer, this is probably the first place to look, once you have your business credit profile in place. They know you, and you’ll be able to skip much of the red tape. This makes sense a lot of the time. But hold on! You have quite a few other options available.
Business credit cards, for example. All major business credit card companies have branched into commercial lending. Obtaining cash from this method is usually easier than other sources. However, this method of financing still needs an established business credit profile. Because lending institutions don’t lend money to sole proprietors. That’s called a personal loan. This is one option to be considered. Business credit cards can be useful in many ways and have reasonable interest rates as well. Once you have established your business entity, you will be receiving numerous offers from business credit card companies to apply. This is a great way to have access to capital. Remember that your business credit cards do not show up on your personal credit report. So any business debt that appears on your personal credit can be transferred to your business credit card, freeing up your personal debt to income ratio. This will increase your personal credit score almost immediately. Many times the credit card companies will offer 0% interest for a limited time (I’ve seen up to one year), then have a reasonable interest rate afterwards (anywhere from 8-14%). That’s far better than a hard money lender or private lender.
Then there’s unsecured lines of credit. The objective is to stimulate micro-enterprises and provide unsecured loans of up to $50,000 to small businesses. You can apply for unsecured lines of credit through your bank or many other institutions that offer them. Once again your business credit profile will need to be in place. Typically, an unsecured line of credit has an interest rate of Prime plus one or two points, depending on some factors that are taken into account. But the bonus here is that the money is unsecured which means you don’t have to put up any collateral for it. This type of lending does not require any financial statements as well. This gives you flexibility especially if your business doesn’t have a great cash flow yet. This is a great method for obtaining capital for your business whether it’s to expand, advertise, or market a new idea.
Pat Gage, The Opportunity Creator, and a leading expert in the field of business credit has helped a number of clients target his specialty, starting, expanding, and growing their businesses through his trademarked 10 Steps to Money System. The Opportunity Creator is not only a sought after business credit coach but also a national speaker. For more information on any topic discussed, visit Gage’s site at http://www.10stepstomoney.com/
Labels: Business Line of credit, business loans, Financing business, obtaining credit
posted by Ralph Marcus (Mark) Maupin | 11:40 AM
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