Determination and hard work will most always give you success, just like understanding how should a business line of credit work will likely lead to growth and profitability. The more you know about this important business tool, the better off your business will be.
When seeking a fast business loan, it’s vital to as the right questions. For example, you may wonder should a business line of credit work for your company. The answer depends on whether you get one from a bank or from an alternative lender.
Should a Business Line of Credit Work Differently at a Bank?
It shouldn’t, but unfortunately it does. First you should know that working with a commercial bank to get a LOC is really hard.
If your business has under $10 million in yearly sales it’s nearly impossible to get approval. Additionally, you will definitely need 100 percent collateral to back your business line of credit.
Also, you should prepare to wait at least 3-6 months before you see any money from the line. Even when you receive your money, it’s not over. A bank they will charge you closing costs that could be up to $5,000. Worse still, the bank will renew your line yearly.
You should also understand that once the line is set up the bank will then charge when you draw on your line. Then they will charge you interest monthly of what is outstanding daily. In most cases, the rate is prime plus 1-3 points, depending on your deal.
How Should a Business Line of Credit Work with an Alternative Lender?
An alternative lender, like Financing Solutions (www.financingsolutionsnow.com), doesn’t require personal collateral. Unlike banks, they will not charge for you to set up your LOC.
As long as your business or nonprofit makes at least $300,000 in revenue per year, you are eligible for this short term business funding. The only time they charge you will be when you actually use your line. Then, you will pay a nominal fee.
There is no charge to set up the line, which makes it a great backup plan. If you pay your line back in 48 hours then there are no fees, making it practically free to use. Even if you keep it out longer the fees are very inexpensive. You can pay back the balance at any time.
To get a Financing Solutions line of credit in place you just need to fill out an online application. You will then receive an email with a written offer shortly thereafter.
If you wish to proceed, they will ask for a few simple documents like bank statements, the most recent tax return, a voided check and a driver’s license. Once you receive approval, you can have the money in your account the same day. This is a perfect example of how should a business line of credit work.
Since the 2008 recession it is alternative lenders, and not commercial banks, that are working the most with small businesses and nonprofits. It’s time for your company to get with the program by obtaining immediate business funding from Financing Solutions.
