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Business Lines Of Credit: Learn How They Work Before You Apply  Small Business Videos RSS Feed

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 separately.

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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