Obtaining Unsecured Business Lines of Credit for Small Business Owners
If you are a small business owner, then consider nurturing your business credit. Building up your business credit will lead to all the opportunities unsecured business lines of credit can offer, such as qualifying for bank loans. The process of acquiring a business line of credit only requires three simple steps: register at a business credit agency, properly oversee business expenses and prepare a solid application.
- Choose a Business Credit Agency
First, you need to register with a business credit agency. Business credit agencies are privately held companies that organize your business’ financial data from banks, suppliers and any public records. With that information in hand, the agency can produce a credit report for your business. The credit report will then be used by potential investors and lenders to determine the kind of loans you can qualify for and business partners you may be able to make. Registration is usually free. There are many types of agencies. You may want to register with one of the main bureaus or pick out one that specializes in your business industry.
- Manage Your Business Finances
You can start by cultivating a positive paying history with your bank. This entails timely payments and managing your balances and deposits. You can go a step further and develop a professional relationship with the banker in charge of your account. Try to avoid large and frequent withdrawals and always make sure you have sufficient funds. If your business must apply for bankruptcy, then the bankruptcy will be recorded by your credit agency. Maintaining funds also includes proper bill maintenance. Keep track of your credit card, phone and utility payments. All of this information will count towards applying for unsecured business lines of credit. Prompt payments will reflect well on your credit as it shows your expertise in managing your finances.
- Apply For a Line of Credit
After looking at your latest credit report, you are ready to apply for a business line of credit. Start by writing up a proposal about your business and why you wish to have a business line of credit. It may not be a requirement, but it will help organize your thoughts and clearly show your intentions. You can then apply for it in person at your bank. Provide whatever documentation they need to see first, such as transaction history or your credit report. Make sure to emphasize your credit score since that will increase your reliability.
Pursuing unsecured business lines of credit for your small business will help safeguard your future and help guarantee future funds you may need. Building your business credit with an agency and well-maintained business finances will ensure a successful application with your bank for your line of credit.