If your business could use a little financial help, you may consider opening a line of credit for expenses that crop-up or emergencies. So, what do you need to obtain a business line of credit? Typically, the following are required for lender approval:
Determine Your Eligibility
Lenders consider many different factors when determining eligibility for loans and lines of credit. Some of the most pertinent include these:
- Your credit score
- Monthly revenues
- Financial history
- How long you have been in business
Much of this information will require further documentation before approval occurs, but more on that later.
Narrow-Down Your Options
Know that you have options when it comes to borrowing money or establishing a line of credit for your company. Some choices that you have are:
- Local Banks
- Credit Unions
- Online Lenders
Generally, traditional banking institutions are the most rigid, and likely the most demanding regarding borrower requirements. Next, is credit unions followed by online lenders for rigidity.
Compare Interest Rates and Fees
Get familiar with the difference between interest rates, i.e. the APR (Annual Percentage Rate) versus the simple interest rate of the transaction. Also, be wary of hidden fees and costs that might be charged each time you tap into your business line of credit.
Get Ready to Apply
Next you will gather the documents needed to finalize and submit your application. This will include things like bank statements, business financial statements, tax returns, legal documents, and even your company’s business plan in some instances. You may be asked to provide or submit to a criminal background check by some lenders.
Be Patient
Once you have completed your application, be patient. Unless you are seeking prequalification from an online lender, you may have to wait a bit for the outcome. Know that if you are not approved by a lender or institution, there are many others; apply elsewhere.
If you are looking for a business line of credit, talk to the money professionals at LMC Alternative Business Capital to learn more today!
