Business establishments go through different financial phases and therefore, whether you are just beginning or a little bit old in it, you may need some cash to pump in your business at some point. Your ability to access cash is an important aspect to help your business withstand the test of time. Financing decisions are as critical as development and hiring decisions.
The going can get tough at times and for that matter, it is good if you can access cash when it is needed. However, the type of credit that you can access should be a safe one. It should not plunge you into more liabilities in case of an expected failure of some sort especially when not able to meet the expectations of the lender. So, which business credit line is the best for your business? Here is the answer…
The Best Business Lines of Credit
As a business owner, it is highly recommended that you get unsecured business lines of credit. This is by far the best financing option for having that cash when you need it. It is a fact that every business owner needs funds access anytime they need it.
Most importantly, this should come at a very competitive rate together with a flexible payment process. To be on the safe side, it is important to take it as an insurance policy that need no payment unless it is needed. In that case, unsecured lines of credit for your business are the best for you. Here are two types that you should consider:
- Traditional Line of Credit
- Non-Traditional Line of Credit
Unsecured Traditional Line of Credit
Not every line of credit in the offering is best for you. The traditional line of credit for your business given out by a bank requires that you have some good documentation if you have to have any chances of getting it. Such documentation includes business tax returns, business registration documents, information about your bank account and so on. Again, after the issuance of credit, an annual review of the finances is needed to keep it. With the traditional line of credit, you will have check-writing privileges but it is apparently difficult to get and at the same time maintain it.
Unsecured Non-Traditional Line of Credit
This is usually issued in the nature of business credit cards. Typically, they are the best form of business lines of credit to go for. With it, you can get quick access to money with flexible payment options. Qualification for this type does not need annual reviews, excessive scrutiny levels and documentation. Here are some of the reasons you should go for non-traditional line of credit for your business:
- Cash can be accessed quickly. You can use as much credit as you need anywhere and anytime. You get help when you need it without delays.
- High limits of credit. These credit cards for business come with high credit limits. This is a very convenient option to help in financing bigger business needs.
- Its flexible. The flexibility in the payment options other than strictly working with a monthly payment makes your life a lot easier. When you acquire the credit line, you can either consider paying in full, pay some portion of the cash or even more than the minimum about set for payment.
- Complete Separation. Business credit cards make it possible for business owners to differentiate between business and personal expenses and at the same time being able to benefit from the business credit report. This way, you can establish the creditworthiness of your business on its own.
- Protection of Personal Credit. Credit cards for small business that report only to business credit agencies make it possible for business owners to protect their individual credit ratings as they build their business credit.
The Bottom Line
There are no guarantees with business lines of credit but you will at least find one that you are comfortable with. Unsecured non-traditional credit line for your business will give you all the flexibility and convenience. However, there is a high chance of accumulating debts if you are not careful.
This is especially because there is no fixed payment schedule. You can easily be tempted to make minimum monthly payment on your business’ outstanding balance. Therefore, it is highly advisable to manage your business credit responsibly. Do your research well and go for money that your business needs. Don’t borrow more than you need. It may turn out to be a liability should you spend the money without a prudent financing plan.