Charles Spinelli: How to Get a Business Credit Line
As a business owner, you’ll inevitably require working capital to facilitate the growth and expansion of your company. According to Charles Spinelli, all businesses experience urgent unplanned expenses, late invoice payments, and other short-term situations in which cash flow will be less than certain. In cases like these, all that access to extra financing can spell the difference between closing down or surviving the crisis.
When it comes to business funding, you have a lot of different options to consider. A business credit line is one of the more popular choices among small business owners.
According to Charles Spinelli, a line of credit is a predetermined amount of funding that you can borrow when you need funding. You can also pay back later.
Unlike a conventional term loan, you can utilize the funds from the credit line whenever you need them for business purchases such as inventory, supplies, or operating expenses. Also, unlike a term loan, which has a monthly repayment fee that is normally fixed, you have the flexibility to repay your credit line at any time without incurring any early repayment fees.
One critical difference between business credit lines and term loans is that credit lines are revolving. This means that you can use your funds up to your approved amount, after which you can repay what you’ve used. The revolving nature of a business credit line will make the funds available again for you. On the other hand, term loans are only lump-sum loans that you can only use once and repay once, with interest.
With this in mind, here’s how you can get a business credit line.
According to Charles Spinelli, you can apply for a business line of credit from traditional banks as well as online lenders. You will have to remember, however, that both lenders will have stipulations.
Banks will normally require collateral, while online lenders need you to have the ability to pledge all short-term assets. Both lenders will also require good credit ratings, which may vary by lender.
As for your business, both require your business to be established for a specified period. Banks need the business to be up for two years and one year for online lenders. They will also need a statement of revenue. Banks need your business to make over $10,000 in monthly revenues, while online lenders need your business to make over $100,000 annually.
Once the line of credit is approved, businesses can now lend from $10,000 to $100,000 at any given time. These creditors will also do a background check on your credit. They will most likely look for recent bankruptcies, foreclosures, or any tax liens, adds Charles Spinelli.
Charles Spinelli writes about different topics on business. Read his blogs by clicking on this link.