Business Lines Of Credit For New Companies

January 19, 2017 by CNH Finance, LP in category “Financing”

Business lines of credit are essential to every entrepreneur. Having access to an extra source of capital increases purchasing power, helps to improve business credit ratings, and can help with internal goals when bank loans are not available. However, getting substantial business lines of credit can be challenging, when going going through traditional providers. Fortunately, there is an alternative.

What Happens When Loans Run Out?

Bank loans do not provide long-term financing. The amount borrowed is finite, and placed debt on the balance sheets. Once that capital is used, a business must spend years paying off the debt, sometimes taking out more loans and compromising credit rating further in order to grow and thrive. Having access to business lines of credit provides a revolving source of working capital without forcing business owners to assume extra debt.

Using Introductory Business Lines Of Credit

Every entrepreneur knows that once a company has a tax ID, the offers for introductory business lines of credit come flooding into the mailbox. Most new businesses do not have a credit ratings to qualify for the “really good” lines of credit, so they have to settle for secured credit cards. The other option is to take special introductory offers, which have low spending limits. Introductory cards usually showcase a low interest rate for the first six months or so, at which point it rises to prohibitive levels. Negotiating a lower interest rate or a higher spending limit is extremely difficult, especially if you are already locked into an agreement with a credit provider.

Leveraging Assets For Business Lines Of Credit

New companies can get access to business lines of credit by leveraging their assets. Instead of taking out loans for working capital, or getting caught in a high-interest, low spending limit agreement, the value of assets can be used to structure revolving business lines of credit. Most traditional credit sources overlook the value of things such as receivables, equipment, and inventory, preferring to offer lines of credit based on business credit ratings alone. Having asset based business lines of credit also offers the ability to increase the spending limit based on improvements and growth within the company.

Lear More About Asset Based Lines Of Credit

At CNH Finance, we specialize in structuring business lines of credit around assets owned by companies. Our solutions promote business growth, and do not force entrepreneurs to assume unnecessary debt. Contact our offices today for a free consultation.

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