Whether you have been doing the business for few months or for five years, the access to the capital is an important element for the survival of a business. When the things get tough, your business can shackle unless it has easy access to money on demand.
For all the entrepreneurs, securing unsecured business credit is by far one of the best choices for fulfilling their cash on demand option. The fact that owners want instant access to capital whenever they want at flexible repayment options and at competitive rates.
According to Independent Businesses Of National Federation, “It is like an insurance policy that doesn’t need to be paid back unless you want to.” There are two types of unsecured business credit lines that one should consider: non-traditional and traditional. So how can one determine that which one is best for your company?
The traditional corporate line of credit is issued by banks and it calls for the substantial amount of documents to qualify. For example, information on bank account, personal and corporate tax returns, registration documents and financials etc.
Also when the line of credit is issued, there is a need of financial annual review to maintain the credit line. While the traditional credit line allows different benefits like check writings, it is one of the most challenging business lines of credit to maintain and also to obtain. As per the recent survey conducted by National SBA almost 29% of the entrepreneurs reported to have reduced their line of credit in last five years and almost one in every 10 called in their line of credit early from the bank.
On the other hand, the non-traditional credit line such as business credit cards, unsecured business loans etc is the best business line of credit that any company can receive. It provides easy access to fast cash and gives you payment flexibility with the traditional line of credit without any drawbacks.
Qualifying for such type of credit line is driven on the basis of credit score and it does not require yearly reviews, too much documentation, different level of scrutiny that comes with the bank credit line. Some of the advantages of non-traditional corporate credit lines are as follows:
- Higher Credit Limits: Business related credit cards carry higher credit limits give more convenient options to finance bigger business purchases. There are many cards that offer 0% APR for the first year of the business set up.
- Access to Quick Cash: With the unsecured business credit line such as corporate credit cards you can easily utilize as much as lesser credit from the line as you would want anywhere and anytime.
- True Separation: Corporate credit cards enable business owners to keep their business and personal expenses while benefiting from the credit reports. This makes it easy for the small business entrepreneurs to establish their credit worthiness of their business.
- Flexibility: With the help of corporate credit cards, you have flexible repayment options as compared to fixed payment on the monthly basis that comes with the business loans. When you tap into unsecured credit line, you have total three options every month. You can either repay the total amount due or pay at least minimal portion of the amount or you can pay more than minimum payable amount.
- Personal Credit Protection: Business credit cards solely report to the credit report agencies that allow business owners to save their personal rating as well while at the same time they build their business credit score.
Non-traditional business credit lines provide flexibility and the convenience that a business needs, but there are few negative aspects as well. One of the major drawbacks is the fact that your business can end up accumulating debt. Without a certain payment schedule, entrepreneurs may be only tempted to pay the minimum monthly payment from their outstanding balances.
Whatever type of unsecured business credit lines you may want to use, it’s important to manage the loan amount responsibility. To get the best financial advice for your new business, Midwest Corporate Credit offers the hassle-free assistance and connects you to right financial products and authorized lenders from all over the America. You can write to us at email@example.com or call (844) 220-8826 to speak to our financial consultant. By giving optimal results to our clients, and understanding the approval models of lenders, we aim to target be the leader in the unsecured business market.