Types of Business Loans For Cash Flow
- A credit score above 650.
- Been in business longer than two years.
- Strong monthly and annual cash flows.
Those are the minimum qualifications, but they could also request more documentation. While you may be able to qualify for a line of credit with a bank, by the time the approval process is completed your cash flow situation could have become dire. Alternative lenders also offer lines of credit at competitive rates, but for far less hassle.
Business loans for cash flow purposes are rarely fixed-rate, term loans, but alternative forms of capital. That is because you will need quicker approval times and more flexible terms for capital designed for cash flow management than a term loan.
Business Lines of Credit
One of the most popular cash flow management tools is a business line of credit or LOC. Similar to a credit card, the line remains open and the capital ready to access when needed. It has a limit, also like a credit card, and can remain open for one or more years. What is often the case, whether it is year one or year five, the line of credit freezes and converts to a term loan.
An advantage to an LOC is that a payment is only required, and you only pay interest, if you draw on the line. Be aware that some lenders charge annual fees to keep it open if you are not using it. This is because the capital sits ready for you to use and they cannot lend it someone else. Lenders might also charge a draw fee every time you take out a withdrawal.
Lenders require more documentation when applying for a LOC, unless you go with an alternative lender, but because they do more due diligence you will pay a lower interest rate. That is one of the biggest pluses to a LOC versus a credit card.
While approval times and limits vary, they can take as little as a few days. Your credit score and banking history will be considered but may just lead to a higher interest rate or lower limit than being denied for credit.
Bad Credit Business Funding
Alternative lenders take more risks than traditional lenders, and can afford to do so because of the rates they charge and their years of experience. Devamını Oku