How Does a Business Line of Credit Work and How Do You Get One?
Wouldn’t it be nice if you, as a small business owner, had access to a pool of money that you could draw from at any time, but you didn’t have to if you didn’t want to?
That’s what you get with a line of credit.
What is a Business Line of Credit?
A business line of credit is a lot like a credit card. A certain amount of money is provided by a lender, which a business owner can draw from at will, without having to get approved each time. They’re usually paid back in monthly installments.
Interest is generally compounded on whatever balance you carry, so if you don’t pay it off in full at the end of every month, you’re going to be paying some interest.
A business line of credit is a great option for a small business, primarily because they can pull from it at any time. Not only that, it’s a great thing to qualify for when the business is doing well, that way you can access it when the going get’s rough.
How Do I Qualify?
To qualify for business credit cards or other business financing, businesses need to present a lender with a strong tax return showing positive income and low existing debt. If your business has no tax return, you can secure the card with a co-signer. This could be you, any of your co-founders, or a friend with a strong solid credit history.
You’re going to need a pretty good credit score to apply for a business line of credit, but if you get one, it can be a great buffer for your business.
Article Source: http://www.lendio.com/blog/what-is-a-business-line-of-credit/