Revenue is the lifeblood of any business. The storefront may be big or it may be small, but having a consistent cash flow is the key to a business’ sustainability. With that in mind, what happens if you’re just starting out or your business has fallen on hard times? Is there a road that can lead you to a prosperous future, and if so, how simple is the process that gets you there? The answer is pretty simple. One of the easiest ways to quickly access the cash you need is through an unsecured line of credit. Here are three basic steps to get the process started.
Unsecured Line of Credit 101

One of the most important steps you can take, as a business owner who is looking at financing options, is to understand what you’re getting yourself into.

An unsecured line of credit is a cash line available to businesses that is not backed by collateral. This is what makes it “unsecured.” You see, banks and other lenders use the collateral provided by a property or vehicle to insure that the funds are recouped. This makes the funds they loan “secure.” Lines of credit do not have an insurance requirement, which makes the money easier to obtain than a traditional loan. This convenience comes with a few drawbacks.

A credit line will give you a smaller amount of cash than a secured loan. It also comes with a higher interest rate and larger fees attached. If you default on the loan, the penalties can be extensive and may involve legal proceedings, so read the terms and regulations carefully before signing the agreement.

As long as you’ve done your due diligence beforehand, and are comfortable with the terms of the loan, an unsecured line of credit is a reliable source to utilize when money is a necessity.

Prepare and Apply

The application for a credit line is straightforward, but there are a few things you can prepare for ahead of time.

·         A credit score of at least 660 or proof of solid credit/sales history is required.

·         An applicable business has to be established between 6 months and two years (depending on lender terms).

·         Verifiable tax forms and business documentation must be presented upon request

·         Be aware of annual fees and large interest payments.

Getting your ducks in a row before applying will expedite the approval process.

Shopping for a Lender

Take your time. Don’t be afraid to shop around and find the lender that’s best for you.

Whether you go through a bank, a credit union, or an online resource; make sure you understand all of the terms and conditions they require.  Always ask about interest rates, documentation, and beware of any lender who charges more than 30 percent. Following these tips will help you avoid getting scammed.

When it comes to investigating an unsecured line of credit; both your time and your money are valuable. Following these steps will ensure that both are well spent.