In most instances, you will be required to put up significant collateral in order to obtain a business loc. This is because banks, finance companies, and private lenders do not want to take the risk of losing money. In the event that you do not repay the credit facility, the lender can take the collateral and sell it in order to recoup their investment. This is almost identical to the recoupment principles of taking out a mortgage.
If you are a startup business, you can acquire a business loc by using property that you already own to secure the credit line. This would be similar to a home equity line of credit. In many startup situations, the primary residence is used as the securing collateral. The alternative to this is method is if you have substantial assets or credit. In this case you can apply for an unsecured business loc. Again, you will need substantial assets and an extensive credit history to acquire an unsecured credit line.
In the event that you are an established small or medium sized business, you can use the assets held by the business to secure the credit facility. These assets can include accounts receivable, owned real estate, equipment, or the predictable income from your credit card acceptances. In lieu of tangible assets, you can use the highly predictable cash flows generated by your business to secure a business loc. However, in order to accomplish this – you must have an extensive business history that shows continued profitability and a positive cash flow over a number of years (usually the minimum is three years for this type of credit line).
Business LOC is a specially designed website for entrepreneurs that are seeking to raise capital for their startups, small businesses, and expanding existing businesses. The focus of the site is on Business Lines of Credit.
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