![]() Confirm that this is the right funding option. Before you get into the specific criteria of any lenders, confirm that you have the essentials in place: a strong personal credit score, enough revenue coming into the business and that you've been operating for at least six months.Ģ. Clarify that you meet the bare minimum criteria. Unsecured LOCs are also a lot harder to obtain – you have to show consistent revenue, be in a super-strong financial position and offer multiple sources of repayment.ġ. Generally speaking, getting a secured LOC is preferable for a small business, because they tend to have a higher maximum credit limit and lower interest rates. Some of these lenders run automated processes where you can simply input a few key details to find out if you're eligible. But, be aware that these do tend to be more costly in terms of repayment – and penalty terms for failing to pay can be more severe than you might think. ![]() ![]() For early-stage businesses, there are plenty of alternative financing options online. Going to a traditional bank is increasingly an option only for very established businesses with a serious track record. Plenty of experts suggest that first-time applicants should start a modest line of credit and pay off the debt quickly as a way of building a credit profile. Broadly speaking, you'll need a personal credit score of above 560, and your business will need to be earning at least $50,000 in annual revenue and to have been operational for at least six months. Any early-stage business can apply for a line of credit, but there are some minimum requirements. It's a feasible route, too – according to research firm Fed Small Business, business LOCs have a 73% approval rate. You don't need to draw all the funds from your LOC, and you pay interest only on what you do. LOCs give you the flexibility to instantly access cash right when you need it, for whatever your priorities might be – be it purchasing equipment, inventory or supplies hiring staff for specific projects or tiding you over during seasonal revenue fluctuations. For many small businesses, cash flow is likely to be a constant concern. There is nothing like an upgraded flight or hotel room to get the best performance from a sales manager! If it can be attained at zero cost to the business, then all the better.This is a super-popular type of short-term funding for small businesses and a pretty essential tool in your funding toolbox. However, tie ins with hotel chains and airlines can result in some major reward benefits. Obviously, the average business is less interested in getting money off groceries. Exactly the same strategies are used in the business world, and there is an opportunity to cash in. In personal banking, credit card companies attempt to seduce potential clients with points and rewards by linking up with schemes like Nectar and Tesco Clubcard. You can decide to repay in full each month to avoid any interest costs, or you can just pay the minimum amount to help preserve your cash flow for the month. Above all, repayments are extremely flexible. These costs can then be spread over the following weeks and months. The card can be used to pay suppliers and to meet other operating costs in the short term. (However, always double check with your accountant as tax rules can frequently change.) Managing cash flowīusiness credit cards can be seen as a rudimentary form of revolving credit. An additional bonus is that business credit cards can be treated as an allowable expense for tax purposes. ![]() You can easily track expenses and cross reference against receipts. When employees incur frequent business expenses, for example through travel, hospitality, and fuel costs, business credit cards makes a lot of sense.
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