As a small business owner, you might like to know that you don’t have to go it alone when it comes to financing your dream. Many small business owners can finance their livelihoods with a small business line of credit. This article will talk about the definition of a small business line of credit, the best sources for them, the best time to apply, and the qualification process.
What Exactly Is A Small Business Line of Credit?
When you take out a small business line of credit, you can take out money against its credit limit as you see fit. With these lines of credit, you do not get the full amount of the credit at one time. However, when you take out a small business line, you will not pay interest on money you do not use. A small business line credit is what is known as a revolving account. This means that when you pay down the credit line, you increase the amount that you will be able to borrow at a later date.
Where You Can Obtain Small Business Lines of Credit
Small business owners can obtain small business lines of credit from either banks and credit unions or online lenders. Traditional lenders like banks and online lenders differ in the way that they handle requests for these lines of credit.
While banks have higher qualifications that many small business owners will find difficult to meet, they can be more affordable than some online lenders. The upsides of online lenders are that they will give you access to your capital more quickly. They will also approve some small business owners that a traditional bank or credit union would reject.
Most banks require small business owners to have the following qualifications:
- A minimum credit score of 680
- A minimum of 2 years in business
- A mimimum of $10,000 in monthly revenues
- The ability to pledge some assets
- No foreclosures, tax liens, or bankruptcies
Most online lenders require applicants to have the following qualifications:
- A minimum credit score of 600
- A minimum of 6 months in business
- A minimum of $2,500 in monthly revenues
- The desire to put up short term assets
- No foreclosures, tax liens, or bankruptcies
The Best Time To Apply For a Small Business Line of Credit
When you have a high credit score: Always check your credit score before applying for a small business line of credit. If you see mistakes on your credit report, dispute them with the credit bureaus.
When your monthly revenues have increased: You shouldn’t apply for a small business line of credit when you desperately need money. When you apply for this type of credit, you should always be in the best possible place in your business.
When you hit a milestone in your business: Many lenders set certain marks for revenues, the time you have spent in business, and your credit score. If you hit an impressive benchmark such as staying in business for 5 years or increasing your credit score by more than 100 points, consider requesting more funds from your lender.
Why You Should Consider AFN For Your Small Business Needs
Advanced Funds Network, in business for over 8 years, prides itself on going the distance when it comes to getting many of their applicants the financing that they need. AFN knows how confusing and anxiety provoking applying for financing can be for small business owners. This is why they do not charge their applicants any upfront fees when they put in an application for funds.
The folks at AFN also won’t leave applicants waiting for days or weeks for some news about the success of their application. Most small business owners will receive a decision on their credit line application within 24 hours of the submission of the online form. What many customers love about AFN is that the form on their website takes only minutes to fill out. AFN’s dedication to each and every application is just part of the reason why they earned an A+ rating from the Better Business Bureau.
