Business Lines Of Credit: Learn
How They Work Before You Apply
Many new business owners use personal lines of credit in order to finance their companies
when starting out. However, once the business has made it through the initial growth phase, it is advantageous to
apply for a business line of credit. Credit may not be extended if the business or the business owners do not
meet certain criteria for this offer. A business line of credit will protect the business
owner's personal credit rating score. Business credit scores and personal credit scores are considered
A line of credit may take several forms such as cash credit, overdraft, demand loan,
export packing credit, term loan, discounting or purchase of commercial bills. It is like an account that can
readily be tapped into if the need arises or not touched at all and saved for emergencies. For instance, the
business line of credit from American Express ranges from $10,000 to $100,000 with no collateral needed. Knowing
that if emergency or unexpected expenses arise, you can feel more secure that you will be able to get the money you
need without any hassle.
It is important to keep in mind that those applying for a line of credit over $50,000,
additional financial documentation will be required. The line of credit also allows the business owner to
receive 100% of the line as cash, which is great for the small businesses which require currency in order to pay
for supplies, new equipment, business trips, and expansion expenses.
Individuals or businesses can apply for a business line of credit at
their own bank or at another financial institution. Lenders may offer varying amounts of credit, as well as
different interest rates making it worth researching. Make sure you research and find a source of financial lending
organizations that builds up goodwill and is willing to charge you a fair rate, especially if your business is
fairly new and need monetary support.
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