Business Lines of Credit for Business Owners with Poor Credit
Every business needs funds to pay its day-to-day operating expenses and continue its growth. But sometimes there just isn’t enough capital available. When that is the case, a business line of credit can be an option. A business line of credit is simply a means for a company to draw funds up to a predetermined amount, pay the funds back that are drawn, and continue to draw funds during the agreed-upon period. The challenge is that a business line of credit may be difficult to get if an owner has bad credit.
How to Qualify for a Business Line of Credit
Banks and other lending institutions will:
Review the company’s assets and income to ensure that the company can repay the line of credit. They will likely review two years’ worth of income statements and will consider accounts receivable, machinery, inventory, real estate, and any other major assets.
Review the company’s financial ratios.
Require some collateral guarantees and potentially personal payment guarantees.
Conduct a personal background check and credit search.
Benefits and Drawbacks of a Line of Credit
The benefits include helping to improve a business’s cash flow quickly, offering financial flexibility, being usable for emergency and other critical expenses, and they can be less expensive than other possible financing solutions.
The drawbacks include:
They are typically difficult to get.
They aren’t usually an option for a company that doesn’t have two years of operating history.
The required covenants may be difficult to meet.
Once the credit limit is reached, it is difficult to increase it quickly.
Options for Business Owners with Bad Credit
The options include getting an SBA microloan, financing accounts receivable with invoice factoring, and arranging purchase order funding. In every case, evaluate the options, be honest, and seek professional assistance.
Seek Expert Financing Assistance
Contact Quick Capital Funds for expert financing assistance. We offer a range of options to meet your operating needs and help you reach your growth goals.