How To Get Your Business Credit Established
If you have your eye on some extra equipment or inventory to help your business grow, you may be ready to take on credit. Bank of America offers many financing options, including credit cards, term loans and lines of credit. Each has different requirements and considerations for your business. With the exception of small business credit cards, certain health care industries, and vehicle loans, many lenders generally requires that your business be under current ownership for at least two years. How To Get Your Business Credit Established.
Credit cards are a popular way to pay vendors and suppliers. But if you need access to more working capital, a term loan or line of credit may be a good alternative.
With a term loan, you receive funds as a one-time lump sum—a great choice if you’re investing in a large-ticket item. For an unsecured loan, you don’t need collateral, and you make fixed payments. A secured business loan, which is backed by collateral, may offer a competitive interest rate, and it may be easier to get approved. Real estate and equipment are common forms of collateral.
With lines of credit, you can use funds when you need them and make payments based on your balance. They can be unsecured or secured. Unsecured credit lines range from $10,000 to $250,000. Secured credit lines start at $25,000. If you prefer an unsecured line of credit, the interest rate may be higher.
Many small lenders also offers products depending on your business type—for example, loans to help start or grow a medical, dental or veterinary practice, and equipment loans for general-purpose or heavy-duty equipment. Small Business Administration (SBA) loans are also a great option for financing and may allow reduced payments over longer terms.
Across all products, rates and fees can vary significantly. Some of the contributing factors can be whether the product is unsecured or secured or if it’s revolving credit or has a fixed repayment. A strong business credit profile can mean better financing terms.
How much information you need to share when you apply depends on the loan type. Generally, for a term loan or line of credit, you may be asked for things like your tax ID, the date the business was established or acquired, the number of employees, annual revenue and net profit, unpaid credit obligations and information on each controlling owner or decision-making manager. A credit card application is much simpler.
Once you apply, it takes about a week to get a decision as the bank reviews your submission. It could be longer if the bank needs more information. After you’re approved, the amount of time it takes to get your funds depends on the product. If you’re ready and have a Small Business Online Banking log-in, you can apply for a small business credit card or an unsecured business loan or line of credit online.
Schedule an in-person or phone appointment with a small business lender to sort through the options to find the best financing solution for your business.