Why Your Business Needs an Unsecured Line of Credit, Just in Case
Just in case you need a reminder, you’re totally crushing it as an entrepreneur. You had the drive to start your own business. Now, you have a clientele of loyal customers, a product you can be proud of and the makings of a solid brand. What you may also need is an unsecured line of credit, just in case.
There is an old saying that you should always carry a knife just in case they’re serving cake. In other words, always be ready for anything. This is especially true in business. With an unsecured line of credit, it becomes easier.
Why an Unsecured Line of Credit is better than a Term Loan
No collateral necessary
In any type of business bank term loan, the bank expects you to pledge enough of your assets to cover the cost of the loan. Since most small business owners don’t have much collateral, you usually have to put your personal residence on the line for a home equity loan. Unfortunately, this means that if you have difficulty repaying the loan, the bank will seize your assets. With an unsecured line of credit, this is not an issue.
No time limits
Banks typically impose strict repayment schedules for quick business loans. Sometimes, even before you have a chance to actually use the money, the payments will already kick in. In addition, if you miss one or more payments, the lending institution will consider your loan to be in default. If this happens, the bank can sue you. Then, they could garnish your bank accounts or place a lien on your assets. It’s also important to note the impact on your credit. From then on, it will be significantly harder to get any institution or business to lend you money. Even if you go out of business, you may still be liable to repay the loan.
With an unsecured line of credit, you will not encounter this problem. Since it is a kind of short term business financing, most businesses put the money back quickly, as soon as their cash flow improves.
No need to work on someone else’s schedule
When you receive a fast loan for your business, you get all the money in one lump sum. Then, you must begin to pay it back on a set schedule. While this might be good if you are trying to purchase a building or make other capital investments, it doesn’t work as a temporary or quick solution. Consequently, it may not be what you need. Studies show that most small businesses only need a quick infusion of cash for a short period of time.
If you have an unsecured line of credit, you can withdraw money and pay it back on a more flexible timetable. Additionally, you only have to repay what you actually use.
No confusing terms and conditions
There are often tough restrictions you must follow during the course of most term loans. For instance, the bank may insist that you maintain a specific debt to income ratio for the entire duration of your loan. If you don’t consistently meet their expectations, they can call in your loan and ask for immediate, full repayment, at any time. An unsecured business line of credit doesn’t have these kinds of demands.
No cash tie ups
While you are repaying your small business loan, you are paying cash. This means that the cash is unavailable for other business needs. Daily expenses like purchasing supplies, making payroll and paying rent all require cash. In addition, if an emergency arises, such as an equipment malfunction, you will not have the cash on hand necessary to get through it. A main reason why many small businesses fail within five years is that they simply run out of cash. When you get an unsecured business line of credit, you have a flexible supply of cash for any time you need it. Then, you are never in danger of running out.
In addition to tying up your cash, a fast company loan will not give it back. Once you make your loan repayments, that money is gone. To get more, you will have to seek out a brand new loan.
An unsecured line of credit works differently. In many cases, once you repay what you withdraw, those monies become available for you to borrow again. As long as you stick to your limits and remain in good standing, your line stays open to use at any time.
No difficulty qualifying
The truth is that a majority of small business owners cannot qualify for a traditional fast business loan. Banks insist that you have an exceptional credit score, tons of collateral and will ask for personal guarantees. If you don’t meet their precise criteria, you are too big of a credit risk for them to take and they will deny your application. Even in the rare instance that you could qualify, it won’t be for the amount you require. Therefore, you will still be unable to meet your goals. There really is no such thing as a fast and easy business loan.
An unsecured line of credit doesn’t come with such harsh conditions. As a result, most small businesses will qualify.
Why You Should Turn to Financing Solutions for an Unsecured Line of Credit
Alternative financing can be tricky. There are many different companies promising an answer to your cash flow woes.
Many small businesses have found success by using a business cash advance company, like Financing Solutions (www.financingsolutionsnow.com). This is indeed the best place to turn for an unsecured line of credit.
At Financing Solutions, they have a commitment to helping the small business owner get the money you need to compete and succeed. They only work with small and medium size businesses and nonprofit organizations. This gives them a unique understanding of the challenges and issues you face every day. Therefore, they know how to make it easy for you to acquire the business funding you need without losing your shirt in the process.
You can begin by answering just 10 simple questions online. Then, they will email you an offer. If you decide to move forward, they will ask for a few supporting documents that you probably already have in your possession or are easy to get. This might include your most recent tax return and a driver’s license.
After you receive approval, the money will be in your account in less than 48 hours. Then, when you need funding, you can request it at any time. For even more convenience, you can either pay it all back at one time or make minimum payments until you are all caught up.
To qualify, you must have a yearly revenue stream of $150,000 to $8 million. There is no charge to set up your line and you pay nothing until you actually use the money. Best of all, there are no restrictions on how you use it.
Why You Shouldn’t Go Just Anywhere for an Unsecured Line of Credit
The reasons why you need working capital are just as important as how much you ask for. However, perhaps the most crucial aspect of obtaining fast business funding is where you get it. You should be aware that all financing companies are not equal.
Just about every entrepreneur can tell you horror stories about choosing the wrong source for quick business financing. There are some companies out there that will take advantage of desperate, cash poor small businesses. This industry has few regulations so it’s easy to fall into the clutches of scam artists looking to do you more harm than good.
Among the problems you may hear about are the type of nickel and dime charges that can really break your bank. Some of these include things like monthly alert fees and monthly maintenance costs. You might also encounter poor customer service and a lack of proper communication. The current economy has made the situation worse so it’s vital to look before you leap, just in case.
Why You Shouldn’t Wait to Apply for an Unsecured Line of Credit
When it comes to fast business money, procrastination is your enemy. The smartest time to seek funding is before you actually need it. It’s difficult to get money from both banks and alternative funding sources when your business is in dire straits.
You never know when an emergency or disaster will strike. It may happen quickly, like a fire or storm that knocks out power, damages equipment or simply knocks you out of business for a little while. Sometimes, a problem is one that has been developing on the horizon for a long time, such as a big client going out of business or issues with a major supplier being late…again. Either way, these types of troubles will require cash to solve them.
If you don’t already have the cash in hand, you will be behind in payments and productivity. This gives the competition time to swoop in and steal your customers.
Getting an unsecured line of credit now means you can be ready for whatever comes along for your business. Attaining one from Financing Solutions means your business can go to the next level quickly and successfully with no road blocks to stand in your way.