Business Credit: Which Type Is Best?

For entrepreneurs, having access to business credit is essential for a couple of reasons. First and foremost, lines of credit are a great source of working capital. Second, by using lines of business credit wisely, ratings increase, which gives entrepreneurs access to larger funding at better rates when loans are necessary. However, new businesses frequently have trouble getting access to lines of credit through traditional channels, because of a lack of financial history, or because their existing credit ratings make it impossible to get the spending limits they need. Fortunately, solutions do exist to businesses of all ages and sizes.

Unsecured Business Credit

Unsecured business credit is perhaps the structure most entrepreneurs are familiar with. Unsecured business credit offers higher spending limits than personal lines, which gives smaller and newer companies access to a capital resource without having to resort to bank loans, or maxing out personal cards to make purchases. The problem is that traditional credit providers are reluctant to extend unsecured lines of credit to new businesses, as they consider them to be in a “high risk” category. Select commercial finance professionals can furnish unsecured business credit to businesses which have been in operation for under two years, by placing the focus more on overall profitability. These unsecured lines of credit work just like any other, with the added bonuses of giving small businesses an edge with better purchasing power, and the ability to improve credit ratings quickly.

Asset Based Lines Of Credit

Another way entrepreneurs can get access to business credit is through asset based financing. By using this method, a line of credit is structured around the property owned by a business. In this case, equipment, inventory, real estate, and receivables are used to calculate the spending limit on a revolving line of business credit. One of the major advantages to using asset based lines of business credit is that it grows along with the company. As a business acquired new equipment, a larger base of operations, or as sales increase, the line of credit also grows.

Get Business Credit Today

Whether you own a large company or are just emerging, The Lavan Financial Group can get you the lines of credit you need. We offer programs for unsecured and asset based credit, and our team will work with you to find a solution that fits your business, without having to navigate the red tape of traditional channels. Call us today at 203-308-4547 and put our expertise to work for you.