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REDDITIf you’re the owner of a small business looking to grow and expand, to finance the cost of unexpected expenses or for short-term working capital to improve cash flow, a business line of credit can be a big help. Since it’s such a convenient source, and often more affordable than a loan, it’s a very common tool for small business owners, with research showing that nearly half of small businesses have lines of credit.
But what if you’ve already maximized your line of credit? And, using your own funds may not be the best idea or even feasible if you’ve recently made a big purchase, perhaps buying one of the Vancouver homes for sale. Commercial credit lines are similar to credit cards, with an amount available for you to use, but with a business, it can be easy to reach the limit. The good news is that there are multiple ways to get that extended.
Pay Close Attention to Your Personal Credit
Lenders will look at your personal credit score closely when trying to decide whether or not to extend your business line of credit. In fact, it’s usually the most important factor in their decision as if it’s a good score, they’ll assume that you’ll be responsible with your business finances too and will more likely be happy to increase your credit line.
Keep Your Business Credit Strong
Of course, your business credit rating is important too. Any organization that has strong credit will be able to reap more benefits as it conveys a reputable image that will aid any funding efforts. If you can prove that both your business and personal credit ratings have improved since you first took the initial line of credit, you’ll be in a very good position with lenders more likely to grant your request to increase your current credit line.
Increased Financials
If your business has increased its financials since you initially took out your business line of credit, you may already be eligible to increase it. When lenders see that a business is bringing in more revenue or has consistent, strong cash flow, they’re usually willing to lend more because you have more capital to cover repayments plus the interest. Typically, you’ll submit a balance sheet to the lender to show you’ve improved the financial capacity of the business.
Pay Down Debt and Other Expenses
You may have some existing debt from other business loans, which is common and usually not a problem with lenders who provide business lines of credits. But you can improve your situation by paying off an expense that’s negatively affected your financials, and by doing so could qualify for an increase in your credit line since you have as much of a debt burden. Before you rush to pay any of your outstanding loans, check the terms to find out if there are any prepayment penalties. Not all lenders charge them, but some do, and it can be very costly.
