Small Business Loans
Business credit is a company’s ability to be able to purchase something now and then repay it later.
Your personal credit and business credit should be kept completely separate. When you build your business credit, you’re basically telling lenders how much they can trust you to pay them back on time
Your odds of being approved for financing increase when you have a strong business credit score. Good credit can also provide you lower insurance premiums, better rates and lower fees, smaller deposits on new leases/services. Another benefit is that a stable score may help you with terms when securing suppliers.
When a small business applies for a loan, the lender will check the personal credit of the owner unless there is already established business credit. It is recommended and important to maintain a strong personal and business credit profile. The debt-to-income ratio of a business will also be an important factor. The higher the cash flow and income, the higher the chances are at getting approved. Another factor is the age of the business. Newer businesses have a hard time at obtaining a loan because there is a lack of history.
Acquiring a loan is usually necessary to start or grow a business. Lenders will often inquire as to why your business needs this particular loan. It is best to determine the type of loan that is right for you and your business. During your first year as a business owner, typically you will rely on business credit cards, crowdfunding, or personal financing. If you have an established business history with revenue then you broaden your financing options. These include: small business loans, term loans, business lines of credit, and invoice factoring.
Your personal credit and business credit should be kept completely separate. When you build your business credit, you’re basically telling lenders how much they can trust you to pay them back on time
Your odds of being approved for financing increase when you have a strong business credit score. Good credit can also provide you lower insurance premiums, better rates and lower fees, smaller deposits on new leases/services. Another benefit is that a stable score may help you with terms when securing suppliers.
When a small business applies for a loan, the lender will check the personal credit of the owner unless there is already established business credit. It is recommended and important to maintain a strong personal and business credit profile. The debt-to-income ratio of a business will also be an important factor. The higher the cash flow and income, the higher the chances are at getting approved. Another factor is the age of the business. Newer businesses have a hard time at obtaining a loan because there is a lack of history.
Acquiring a loan is usually necessary to start or grow a business. Lenders will often inquire as to why your business needs this particular loan. It is best to determine the type of loan that is right for you and your business. During your first year as a business owner, typically you will rely on business credit cards, crowdfunding, or personal financing. If you have an established business history with revenue then you broaden your financing options. These include: small business loans, term loans, business lines of credit, and invoice factoring.
Business Line of Credit
Business line of credit is a revolving loan that allows access to a fixed amount of capital. A line of credit can be an important tool to fulfill some financial needs. A business line of credit is different from a business loan. With a loan, you need to make regularly scheduled payments to repay the loan. With a line of credit, you only pay when the business draws from the line. Interest is only charged when you pull money from the line of credit.
There are certain times when you should use your business credit. If your business regularly needs access to funds in order to meet short-term capital needs to manage your business’ day-to-day capital needs then you may want to consider applying for a line of credit.
Most lenders/banks will offer a line of credit to businesses with established credit profiles and businesses with a track record of revenue to be able to support the flexibility of a line of credit.
Learn more about Business Credit HERE!
There are certain times when you should use your business credit. If your business regularly needs access to funds in order to meet short-term capital needs to manage your business’ day-to-day capital needs then you may want to consider applying for a line of credit.
Most lenders/banks will offer a line of credit to businesses with established credit profiles and businesses with a track record of revenue to be able to support the flexibility of a line of credit.
Learn more about Business Credit HERE!