Everything You Need to Know About an Unsecured Business Line of Credit
If you’ve ever had to worry about cash flow problems or unexpected expenses in your small business, the best way to handle those situations might be with an unsecured business line of credit. Unlike a normal business line of credit which requires collateral, an unsecured business line of credit will not tie up your assets or jeopardize ownership of your business.
Other forms of financial support
Compared to a term loan from a bank, a business line of credit does not involve having you receive a lump sum of money which you pay back over time. Instead, you start out with a pre-defined credit limit, and you make no payments at all until you actually draw on that line of credit. Once you have used some amount of money from the credit line, you would make monthly payments on it, to pay back the amount that you withdrew. Each time you make a payment, that amount adds back to the original credit line, so that you can continue to use that available credit indefinitely.
This is exactly the kind of flexibility that most small businesses would most benefit by, especially since that money is sitting there waiting for you to use it whenever any shortage of cash is experienced. A business line of credit is very much like using a personal credit card, since both of them have pre-defined limits, and whenever you take money out on either one of them, you’ll have to pay it back in monthly installments.
The difference between a secured and unsecured line of credit is that the collateral for a secured line of credit provides a lender with greater confidence, since some kind of assets have been put up to guarantee the loan. Unsecured business lines of credit do not involve any kind of collateral, but they are also harder to find and be approved for. Any business approved for an unsecured business line of credit will need to have a high annual revenue and a stellar credit score, because these factors serve as confidence points for a lender.
Check with us for a business line of credit
If your business would benefit by having a line of credit to cover cash flow shortages, we may be able to help. Contact FinCentral Capital at your convenience so we can discuss how a line of credit may help your business become more stable, and possibly even enjoy growth.