What is business credit line? It is the line of credit given to a businessperson for his/her use. Generally it is given to help the entrepreneur to meet his needs. This line of credit is often given without any collateral to a businessperson on an installment basis. The rate of interest in this line of credit is often variable.
An unsecured business line of credit is a revolving credit line. Under this, an entrepreneur is given an unsecured amount of money, for a fixed period. After the business line is approved business owner gets free to use the capital as and when necessary. However, if the loan amount is not sufficient and payments are delayed or made in bulk then the business owner has to pay the interest on the loan amount. Hence this type of business loan does not require security.
In case of secured business loans the amount of money to be lent is based on the equity value present in the collateral. Lending companies use this factor in assessing the loan amount. The rate of interest in unsecured business loans is usually higher. Since there is no collateral attached to the loan amount there is very less risk involved.
Unsecured loans can be used for a wide range of purposes. It can be used for taking a holiday, starting a new business or paying off existing debts. If the loan amount is large then it can also be used for expansion. There is no credit check for getting unsecured business loans. The fact that you do not have any collateral to keep the loan secured matters little.
Many times people take a business credit line that is bigger than what they are capable of repaying. This is because of a misunderstanding between the lenders and borrowers. Borrowers try to take loans against their business assets which they believe will protect them from repayment failure. However, this is not the case and the lender will end up repossessing the asset in case of non-payment.
There are several financial institutions which provide unsecured business credit line to small businesses. These are sometimes referred to as cash advance or payday loans. There are some risks involved with these types of business loans. Therefore, you should make sure you can repay the amount as decided by the lending company.
An important feature of a business credit line is the ability to make one payment per month without much hassle. All the credit checks will be done online and this makes the entire process simple and fast. The payment can come through a bank account or your credit card. You may also get a debit card for the purpose.
To apply for an unsecured business credit line, you should get in touch with a few lenders. Compare their terms and conditions and choose the one which suits you best. If you are a business owner, you should get the help of a financial consultant who will guide you in the process. Make sure you pay back promptly so that your business runs smoothly.
If you own a franchise, you can get financing easily from banks and other institutions. The best way to go about getting an unsecured business credit line is to secure it from the franchisor first. This will reduce any risk on your side and help you get approved instantly. Once you have obtained funding from a bank or . . . . . . other financial institution, you can proceed with applying for an unsecured business credit line.
If you own a franchise, you can take the help of the franchise consultant to apply for the line of credit. They will help you fill up the application form and will submit it to the lender for consideration. Once you have submitted the application form, you should have to appear at their office to discuss your business. This is very important because the approval decision will depend on the information you give them. Once the lenders find that you have good credit history and you have a viable business plan, you will easily get the required funds.
Another source where you can get a business credit line is your own bank. There are many banks that have special programs that you can apply for, which will be helpful to you. However, you need to make sure that you are not a franchisee first, so that you will not get rejected for the line of credit.
You can also start searching for a business credit line online. There are many lending companies that offer such services, which will help you in your venture. These companies usually offer different credit cards and unsecured loans, which are very useful. There is even a credit score checker offered by some of these companies, which will be helpful. However, you need to make sure that you choose a reputable lender for availing these services.