4 Steps to Getting a Business Line of Credit

If you’re trying to improve your cash flow management while building your credit score, you need to understand business lines of credit and how to access them. They’re a step more sophisticated than business credit cards, which are also useful for building that score up. Credit lines allow for a cash draw, so unlike a card, you can get money deposited into your account to use with cash-only suppliers and vendors. That allows you to use the funds as working capital instead of just having a specific kind of spending extension, which is what business credit cards are for.

By combining both kinds of unsecured credit, you can improve your cash flow by making use of both grace periods and short-term financing for improved purchasing power. This, in turn, often provides the extra funding needed when invoicing takes a little while or projects run overtime, allowing companies to avoid more costly forms of financing. If you’re trying to get lines of credit established, there are four steps. The first is to make sure you have no outstanding past due debts that might show up on your credit report. You should take care of that before even applying.

Next, you need to find a lender who offers credit lines to businesses. In fact, you need to find several. There are many ways to structure credit like this, and there’s also a wide range of interest rates that depend partly on the provider, partly on your current credit score, and partly on the payment structure you agree to. Shopping diligently will give you the best idea of your choices and allow you to pick the one that suits your current needs best, so don’t rush this step.

Once you’ve selected a lender, you’ll want to put together your financial projections and check on your credit yourself, to get a realistic idea of the amount of credit you need and what you’ll be using it for, strategically. This allows you to be realistic about your needs and about what you’re likely to be approved for based on your company’s financial health.

The last step is to apply, and most lenders who offer lines of credit make this step easy. In fact, several have preapproval credit screenings that take just minutes, allowing them to process your full application within a few days. That kind of speedy service lets you flex your credit to get working capital sooner, so you can manage your cash flow, expand your volume of business, and strategize the next phase of your company’s development.

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