How To Get Qualified for a Line of Credit for Small Business
Running your own small business is definitely a rewarding endeavor. However, it’s also a challenging one, especially when your business is new or still gaining a secure foothold in your industry of choice. Keeping cash flow consistent can be especially difficult, but lines of credit can help take the guesswork out of the process. Here’s a closer look at your options.
Traditional Loans and Bank Credit
A traditional bank or lending agency is usually the first option a business owner thinks of when they’re interested in credit and with good reason. Bank credit and traditional loans are among the most straightforward ways to secure necessary funds. However, qualifying can be a challenge if your small business isn’t already established and successful. If you can’t provide your lender of choice with sufficient proof of your business’s viability, be prepared to provide collateral instead.
SBA Lending Options
Don’t count the Small Business Administration (SBA) out when looking into lines of credit, especially if you’re a new business owner. Their SBA 7 lending programs are designed specifically to help people just like you attain the funds they need to turn their budding companies into blossoming successes. In a nutshell, the SBA acts as a middle man between the official lending agency and the business owner, which can definitely make it easier to get approved in the first place. SBA programs can help you secure lower interest rates and more generous repayment terms as well.
If neither of the above choices is a good fit for you or your business, there are other avenues to explore. For instance, many business owners seek to get third-party investors involved. Possible investors could be anyone from a family member or friend with a little extra cash on their hands to a third party organization that makes it a point to invest in promising small businesses like yours. Of course, you’ll need to prove that your business is worth investing in first.
Crowdfunding is another alternative to traditional lines of credit that is gaining in popularity. Instead of gaining all of your funds from a single investor, you instead raise your money via a larger group of people investing smaller amounts apiece. The key to achieving success with crowdfunding is an engaging, creative campaign that includes appealing rewards for participating.
At the end of the day, every business needs something to fall back on when money’s tight, and the right credit options can help. Which one is the best fit for your business?