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How to know if Unsecured Lines of Credit are for you

In this highly competitive economy, many small businesses are struggling to keep their doors open. If you’ve heard about unsecured lines of credit in your local community, and are curious to know more, you’ve come to the right place. But how do you know if these credit lines are for you? It all depends on how you answer the next three questions.


1.     Is your business relatively new? (6 months to 2 years old)

2.     Are you spending more money than you’re making?

3.     Are you looking for a way to build good credit?


If you answered yes to any of these questions, chances are opening a credit line is the right choice. That said, there are some things you should know to make sure you use the funds wisely.

Unsecured Credit: A Necessary Remedy

Unsecured lines of credit are a path to business financing that’s not backed by collateral (i.e. property, equipment, or a company car). The best use for these funds is eliminating a cash flow problem. Specifically in a situation where more cash is going out than is coming in to support the business. This is a common problem for new and small businesses alike.


If an immediate remedy is needed, it is important to make sure that your business will qualify to receive unsecured lines of credit. The first step in this process is to make sure that you have established a professional credit score.  This piece of advice may seem strange given that lenders typically advertise about the minimal credit requirements involved, but the terms and conditions vary by lender.



Here’s what the experts recommend:


• Have a previously established credit history on record with the Small Business Financial Exchange. This can be based on other loans or credit accounts, but don’t have too many credit lines. You don’t want your debt ratio to affect the qualification process.


• Credit check or no credit check; keep your score at 660 or higher so qualification isn’t a gamble.


• Make sure your business has been established between 6 months and two years (depending on the lending requirements).


• Make payments on time.


• Review your credit report quarterly and work to improve your rating.


Following these borrowing guidelines will help you repair bad credit, borrow less money in the future, avoid “revolving door” debt traps, and pay off your existing debt faster.


Unsecured lines of credit are a great way to repair bad credit. If you need additional help documenting a professional credit history, learning debt accountability and management skills, building a lending profile or finding a quality lending company; consider hiring a finance coach. A coach can put you in touch with reputable local lenders and help keep your business finances on track to ensure that you reach your goal of lasting sustainability.


Unsecured lines of credit-when used wisely-bridge the gap from being a fledgling business to being a mature one that runs like a well-oiled machine. Don’t let doubt bar your way; apply today.


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