Are you confident in your credit report and your ability to pay off a business loan or line of credit, without having to worry about collateral or going in debt? Do you think there is a good chance you qualify for an unsecured business line of credit? There are several banks and lenders that specialize in business financing, whether you need an increase in seasonal funding, paying for research, product development, equipment, advertising, etc.
Keep in mind that lines of credit that require no collateral or personal guarantee aren’t easy to get. You should at least have been involved in business for 2+ years and have good credit. For term loans, there is a potential downside to getting approved, since no collateral is required, there is a possibility that the interest rate will be higher, and that your repayment term will be shorter.
This is where lines of credit come in. They differ from a typical business term loan in that you don’t get all of the money at once. Instead, the funding is simply there whenever you need it. You’ll still need to pay interest on the credit, but for the most part, an unsecured business line of credit will typically have lower rates than a term loan. Obviously, just like any loan, the interest will skyrocket, and you’ll get charged late fees if you don’t make payments on time.
Unsecured Business Line of Credit Similarities to Credit Cards
A business line of a credit isn’t exactly the same as a business credit card, even though they’re still similar. A line of credit is essentially funds deposited into the bank in advance, yet not with the same terms as a loan. A business credit card is just that – a physical credit card you get to swipe. The credit card might actually be less of a hassle for you depending on your circumstances, as the application process might not be that demanding.
A few other options business owners should look into include an “invoiced-back” line of credit, “inventory-backed” line of credit, and “equipment-backed” line of credit. Each is self-explanatory. It all depends on your company’s needs, or your own needs if you’re a professional who is self-employed.
If you haven’t spent much time in business and/or don’t have a good credit score and don’t think you qualify for unsecured lines of credit or a loan, you can still consider secured credit cards or putting up collateral. A secured credit card will help you build your business credit, which can help you qualify for something better in the future. But you need to be careful with them since it’s not the best concept (IE, putting $2,000 in an account just to cover a $2,000 limit).
Whatever your circumstances, you can learn more about all types of loans, funding, and an unsecured business line of credit at US Business Fund. There are many options available and you can get free info to help you better understand what you might qualify for.