Small Business Line of Credit!



Is a small business line of credit what you need to get your small business started?

Before you decide if a business loan is what you really need, you should do an inventory of your personal assets. Here are a few things to consider:

Personal Assets

Self financing is the number one way of financing for most small business owners. Think about your assets and let’s see if we can help you uncover resources you didn’t even know you had.

• Look at any savings accounts you have.

• Personal credit cards with large available limits, this is one way, but may be more expensive.

• Do you have a cash-value life insurance? You can use the value built up as a ready source of cash

• If you have a 401(k) retirement plan and are still employed, you may consider borrowing against your plan.

Business Line of Credit

However if you don’t have enough of your own assets, then you may want to consider a small business line of credit loan.

A business line of credit loan is one of the most popular forms of financing available for the small businesses. This is a short term loan that can extend cash as you need it and usually carries one of the lowest interest rates a bank offers. Many small business line of credit loans are written for one to five years and may be renewed almost automatically for an annual fee.

Unsecured or Secured

Some banks may offer unsecured small business line of credit loans, whereas, others will require collateral to secure the loan.

If a local lender knows you well and is convinced you can repay the loan, you may be able to get an unsecured loan. However, most small businesses are unlikely to qualify for an unsecured loan.

A secured loan on the other hand requires some kind of collateral and generally has a lower interest rate than an unsecured loan. Here are a few things banks may consider for collateral are:

• Primary residences

• Investment property

• Business Equipment

• Vehicles

• CD/saving

Where and how to begin.

It may be easier to get a business line of credit loan from one of your community banks instead of going to some of the bigger banks

You can always talk to friends and other entrepreneurs in the same industry for leads on banks that have helped people in your business. Put some work in finding the right lender and you’ll be glad you did.

And remember, banks are only one option when seeking a small business loan.

Other loan options

You can check with some of the commercial finance companies in your area. They may be more willing to look beyond numbers and assets, but may require you to come up with 25 percent of the needed capital yourself. They may also want to see a business plan, financial statements and cash flow projections. To find out more, visit Commercial Finances Association at www.cfa.com

Don't forget about the Small Business Administration loans and grants. SBA is an excellent financing source for the small businesses. Each state has a district office, so call or visit your local SBA office today.

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