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If you run a small business or you are just launching your startup, there’s a good chance that you’re going to want to secure a line of credit at some point. However, many business owners cringe at the thought of approaching a lender.
Here’s some guidance on securing a line of credit that you can draw from when you need to in order to help your startup grow.
Shop Around
The first thing you need to do is find out what’s available for you. All lenders are different, and they all have different requirements.
If you don’t know where to start, go to your bank. Find out what options they have, and then find out what they require from you. Don’t actually apply for the line of credit yet because you may be wasting your time.
Once you have some details from your bank, use these to compare with other lenders. You may find that other banks might be a better option. For example, they may be more accessible for startups, or they might have a better rate of interest. But you might also want to look beyond the banks.
Look at Online Lenders
One option that you might want to look into is online lenders. These are different from the banks, and they may provide you with a more flexible way to get access to a line of credit (try this site to get started).
Sometimes they are more expensive than the banks, but they can also be a lot quicker and more convenient, and they may prove to be a good option if you are just getting started.
Prepare Your Information
Once you have chosen a lender that you want to approach, you’ll need to get everything in order. The lender will probably need to see some financial information, not just about your business but also about your personal situation, so gather the required income statements and tax returns.
Set Up a Line of Credit Before You Need It
One of the most common tips provided to businesses that want to get a line of credit is to apply for one before you actually need it.
So if you are just starting up but you don’t need the credit right now, don’t let that stop you. You can then use it as an opportunity to start building up your credit profile.
What this means is that after some time, when you really do need access to credit, perhaps a larger business loan, you will have built up your profile. This might help to make it easier to get a larger credit line.
You could also get a business credit card that you use regularly in a controlled way just to build up your credit history for your business.
Start Looking at Your Options
Getting a line of credit can be very useful for small businesses. It allows you do dip in and use money as and when you need it, which can help in many ways.
But even if you don’t need a line of credit yet, start looking into your options and consider applying for one to build up your credit history, which could help you in the future.