Entrepreneur’s Guide to Unsecured Business Lines of Credit
A business line of credit can be a good way for your business to have access to financing in order to ensure that operations run smoothly. Unlike other financing options, a business line of credit can be a long-term solution that can be reused frequently. Understanding business lines of credit and how to qualify can help you determine if this is a financing option for your business.
Business Lines of Credit
A business line of credit is a way to provide financing for your organization. Unlike a term loan, a business line of credit can be reused and repaid as often as needed as long as the terms of the line of credit are maintained. There are two types of this financing available: secured and unsecured business lines of credit. The only difference between the two is that an unsecured line is not backed by collateral. Unsecured business lines of credit are usually used by businesses with lower credit ratings. The range of lines of credit vary based on qualifications and need, but they are usually smaller than term loans.
Qualifying for a Business Line of Credit
There are a number of factors examined to determine qualifications for a business line of credit.
These factors include:
- Business revenue over the past few years
- Multiple years of business history
- Personal and business tax returns
- Business financial statements
- Bank account information
Secured business lines of credit also require some type of collateral for the qualification process.
A business line of credit is a way to help ensure that your business has the financing needed to continue operations. Whether you opt for secured or unsecured business lines of credit, knowing how this financing options works and how to secure it can help you narrow your financing options. In this way, you can make a decision about the best way to secure ongoing financing for your business.