Many business owners come across companies offering “seasoned business tradelines.” These shelf companies with years of credit history can be sold quickly to newcomers trying to establish fast business credit.
Business tradelines are reported to business credit agencies like Dun & Bradstreet, Equifax, and Experian for creditworthiness reports that lenders review when considering loans and lines of credit to businesses.
BUSINESS LINE OF CREDIT
Known as flexible financing for small businesses, a business line of credit acts like a business credit card in its flexibility and draw power. Like its secured counterpart, this flexible finance tool may require the pledge of assets against default; such assets could include inventory, accounts receivable, or even real estate or equipment equity as collateral pledged against default. Lenders generally consider business lines of credit unsecured debt until sufficient profits and revenue have been achieved to justify pledged security assets against default.
Revolving lines of credit can be great resources for growing businesses, helping build FICO scores while meeting specific business needs. But they must be managed carefully to avoid becoming trapped in an endless cycle of debt repayment.
Small businesses rely on access to capital for success. Unexpected expenses, delayed invoice payments, or jumpstarting growth initiatives often necessitate emergency access to cash quickly – this is where revolving lines of credit come in handy, allowing businesses to withdraw funds when needed and only pay interest on what has been utilized.
Short-term financing solutions like merchant cash advances (MCA) are an ideal way to meet short-term funding needs and cover operational expenses like supplies, payroll, and other costs associated with running your company. Furthermore, these financial products can help cyclical businesses with seasonal dips in revenue stay afloat during those challenging periods.
When selecting between a line of credit and other types of business financing options, it’s crucial to understand their terms and use cases. A business line of credit provides flexible financing for operational expenses, while loans may be better suited for fixed asset purchases or leasehold improvements.
Many lenders provide online applications for small business lines of credit that can be completed quickly. Usually, these forms ask you to link your bank account and provide basic financial statements and reports as part of the application process. While lenders should make this part easy for applicants, please remember that lenders review each application and can deny or approve financing based on their assessment of your business finances.