How Small Businesses Can Qualify for Business Line of Credit?

Small business owners that want quick access to cash for meeting urgent financial requirements of their businesses can get help through Business Line of Credit. The credit program allows businesses to gain access to the required cash in just around 48 hours. Qualifying for the Business Line of Credit is relatively easier as compared to applying for traditional loans.

What’s best about the business line of credit program is that you don’t have to go through too much of paper work to apply for the fund. Moreover, you do not need to acquire any collateral to obtain the funds. Just submit the online application, and gain access to cash in as little as two days.

How Can You Qualify for Business Line of Credit?

Qualifying for a business line of credit is not that hard. The requirements of obtaining this loan are less strict as compared to traditional loans. That being said, there are certain basic requirements you need to fulfill when applying for Business Line of Credit.

1. Profits and Revenues

This is the most important criteria used by business line of credit lenders in offering the loans. Revenues are considered the main source of debt repayment. Firms that have low revenues are looked upon by lenders as a high credit risk. The size of the credit you obtain will most probably depend on the amount of revenue and profit the firm has been able to generate in the recent months.

2. Financial Ratios

Some lenders also look at certain financial ratios that determine health of the business. Financial ratios such as current ratio, debt to equity ratio, and fixed charge coverage ratio will be analyzed to judge your ability to repay the debts.

3. Number of Years in Business

The number of years a business is operating is an important factor that most lenders look into before giving approval for business line of credit loan. Firms that have been operating for two years or more have greater chance of obtaining the loan. Lenders consider businesses with experience and those having a solid operational plan, due to which they will be able to judge their ability to repay the loan.

4. Guarantees

Some lenders may require you to provide guarantee that you will be able to repay the debt. The guarantee can be in the form of a co-signor who assures that your debt will be repaid. Note that, in most cases, a guarantee is not required for obtaining a business line of credit. This is usually required in case your revenues or profits are not sufficient to obtain the loan.

5. Covenants or Rules of Good Credit Behavior

Finally, some lenders may also require you to agree to follow certain rules of good credit behavior before obtaining the business line of credit. The rules may include repaying a certain sum of money periodically, advising the lender on change in business location or address, and other similar rules. 

Whether your financial needs are large or small, the business line of credit can help you gain quick access to cash on a continual basis. If you want to know more about the requirements for obtaining a business line of credit loan, you can email us or call us today at 1-888-745-1114.

Disclaimer Notice: The article/blog is intended for informational purposes only. You should not make any financial decision without consulting with a financial expert first.

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