These days business lines of credit are quite popular among business owners. Entrepreneurs opt to go for a business line of credit to grow their business. A business line of credit competes with traditional loans.
One can apply for business lines of credit at the time of emergency. Unlike traditional loans, business lines of credit offer instant cash flow to the business. The interest rate of the business line of credit is quite flexible.
It is because you have to pay interest for the amount of sum you borrow from the limit offered by the business line of credit. They easily qualify as quick business loans.
Time in Business
To apply for a business line of credit the business has to show the age of the company. The age of the company is the date when it was filed with the Secretary of the State. The minimum age of the business must be six months if you want to go for a business line of credit. The approval chance of the business line of credit is higher with a longer duration.
Revenue generated by the company
The revenue generated by the companies is verified before getting approval of the business line of credit. Companies that generate less than $150,000 are qualified to get micro-lending solutions.
Small companies or start-ups that generate a gross revenue between $200,000 and $500,000 per annum are qualified to apply for unsecured business lines of credit.
Companies that generate annual revenue of over $500,000 are eligible for a flexible line of credit. To get a business line of credit, your company must have high revenue generation per annum. High annual revenue can get you quick business loans.
Before approving the business line of credit, the institution verifies the debt to income ratio or debt to revenue ratio of the company. This verification is essential before the business line of credit is sanctioned. The verification gives the overall idea of the debt situation of the company.
The approval of the business line of credit will be much faster when the debt situation of the company is quite low or manageable. It is advisable to get an open line of credit to be in the safe zone.
The open line of credit is beneficial because it shows low credit utilization. The low credit utilization looks appealing for the business. The process is much faster for an open line of credit.
Cash Flow Analysis of the business
Cash flow analysis is an important process before approving the business line of credit. Underwriting is important to assess to learn if the client can return the loan. Cash flow analysis gives the complete situation of the stability of the business and the scope of return of the credit along with the interest
Unsecured business credit line for quick business loans
If you are an entrepreneur or have a new business, you will always need cash to maintain the capital, inventory or investment. But it can be a little bit tough to take a traditional loan.
It can be very time consuming if you go for the traditional loan system. So, if you opt for an unsecured business line of credit, you get quick business loans.
The unsecured business line of credit works based on the credit limit. They assign you a credit limit within which you can borrow any amount of money. You have to repay the amount you have borrowed along with interest.
You are charged with the annual fee for an unsecured business line of credit. The other benefits of this quick business loan system are mentioned below.
- No Collateral Needed: Unsecured business line of credit does not require any collateral. For new businesses, it can be tough to offer valuable collateral. For this situation, an unsecured business line of credit can get you quick business loans without risking any assets. As there is no collateral involved this saves the time of the verification of the collateral and other related paperwork.
- Minimal Qualifying Criteria: Traditional loans and secured business lines of credit have a long prerequisite before sanctioning a loan. This can be quite time-consuming. You don’t have to go through this hassle when you opt for an unsecured business line of credit.
You have to produce your financial statement for the previous six months or 12 months. The business must have a stable income to get an unsecured business line of credit.
- Instant funding for the business: If you are in search of quick business loans, this is the perfect method to get the cash. Verification of the collateral and other documents are not necessary when you go for an unsecured business line of credit.
This saves the time of approval of the loan. The sanction of the money is done instantly and your company gets quick cash. The online application system for an unsecured business line of credit has made it a time-efficient method of getting a loan.
- Larger loan amounts with higher credit limit: In a secured business line of credit and the traditional loan they ask for collateral. The loan is offered on the value of the collateral. This can be a tricky situation if you want a large sum of cash.
This situation can be evaded if you go for an unsecured business line of credit. You can get a high credit limit and utilise any amount as per your requirement without risking your collateral. You have to timely repay the borrowed some along with the interest.
- The flexibility of loan payment: Unsecured business lines of credit come with flexible payment options, unlike traditional loans. The tenure of repaying the unsecured business credit line is quite long.
- Long-term money lending relationships with the institution: Unsecured business line of credit is also known as revolving business line of credit you can borrow money as per your requirements and again borrow within the credit limit.
Due to continuous transactions, you stay in touch with the money lending institution and establish a long-term relationship. Timely repayment of the debt creates a trustworthy relationship and you can get quick business loans.