Unsecured Business Lines of Credit for Beginners
If it’s difficult for you to understand the types of credit available to you during your pursuit for a thriving business, you’re not alone. Here’s a quick breakdown on what will suit you best.
The short story
There are two main types of credits or loans, secured and unsecured. Secured credit is always attached to some kind of collateral, like a car or a home. Unsecured credit isn’t attached to anything, giving you freedom in usage.
When most people think of obtaining credit, they think of a term loan which gives you a lump sum that must be paid by a certain deadline. While these types of loans can be handy for things like school, an unsecured line of credit is much more helpful for business.
What is an unsecured line of credit?
An unsecured line of credit works much like a credit card. You can get a business line of credit anywhere from $5,000 and up. Again, just like a credit card, smaller lines of credit are easier to obtain, but cap out much quicker. You can use the money within your credit limit as many times as you want, as long as you continue to pay off the card. Making payments on time, and in full, are always a smart route in order to avoid paying interest.
How to apply?
Use your bank statements, proof of revenue, and a quality credit score to apply for a line of credit. Banks are the most reliable place to receive a line of credit with the lowest interest rates. While you can find unsecured lines of credit online, shopping around for the best offer is essential. Check out websites like Funbox, OnDeck, and Kabbage. Keep in mind that small business financing will differ in options compared to well-established, high revenue business.
Don’t be scared to approach banks and financiers that will help your dreams continue to come true. There are quality business lines of credit out there for everyone!