Many small business owners wind up with the impression that finding financing is difficult for small companies. While that might be true for certain kinds of bank loans, it is not universally true. In fact, some short-term credit products are incredibly easy to qualify for, provided you have an asset to use as collateral and clear documentation of your company’s monthly income. Business lines of credit are flexible and reusable and they leave you with additional options like invoice financing if you need to dig in for funding from two sources to make the most of an opportunity.

Unsecured vs. Secured Credit Lines

You can find lenders offering unsecured cash draw credit lines, which are approved on your income and credit score, but they have lower maximum balances and higher interest rates than credit lines that are secured with a real estate asset. Since the cost to borrow is higher, the same income gets you considerably less capital.

By contrast, secured credit lines are approved based on the value of the asset and your income, and the lower interest rates you enjoy can make a big difference when it comes to a maximum monthly payment for a maxed-out balance.

Applying for Business Lines of Credit

Credit line applications require you to substantiate the three criteria used to make a determination about the size and cost of the line your company can afford. That means you need to show the value of the collateral you’re using, with proof of ownership. You will also need to document your company’s income. Last, it’s fair to assume they will check your credit score. Make sure your business and personal credit scores are in order, to the best of your ability.

Credit line approvals do not take very long under most circumstances. You should hear back within a few days, although it can take longer to close on a line, depending on whether the lender needs additional information or not. Be responsive to any requests to keep things moving smoothly.

Managing Cash Flow With Lines of Credit

Since you can typically manage your debt independently, credit lines make ideal tools for cash management. Tap into yours to make payments on time, then pay it back off when customers pay invoices or banking partners make deposits from various income streams. However you set it up, the flexibility of a credit line is what makes it such a valuable financial tool.