Having a business line of credit is imperative for a company, whatever the size, old or new. It allows you to survive during slow periods, giving you access to cash when you need it most, at a competitive rate. Unsecured lines of credit (as opposed to secure lines of credit, which require collateral) have two basic types: traditional and non-traditional. Here’s how you can decide which one is right for your business. 

What Is A Traditional Unsecured Line Of Credit?

A traditional line of credit is issued by a bank, and comes with a lot of strings attached. You’ll need to provide tax returns (both personal and business ones), bank account information, business documentation, profit&loss statements, and whatever else the bank requires. In addition, even after you’ve qualified and been granted the line of credit, you’ll have to undergo an annual financial review every year. They’re often reduced or terminated over time.

If you’re willing to go through all this, traditional unsecured lines of credit do offer some benefits, like being able to write checks.

What Is A Non-Traditional Unsecured Line Of Credit?

The best example of non-traditional lines of credit, meanwhile, are business credit cards. These are much simpler to acquire and maintain. As long as you have a good credit score, you can qualify for a business credit card.

Benefits of Business Credit Cards

Here are a few of the reasons why going the non-traditional route and getting a business credit card could be the best route for you:

1. Quick, flexible access to cash. You can use a card the second you need it, and only use as much as you actually need down to the cent (as opposed to a loan, which is a fixed amount up front). 

2. More payment scheduling options. If you’re able to pay off the full statement balance in a month, you can do that, instead of having to conform to a fixed repayment schedule. Or, if you need extra time, you can simply pay as much as you’re able each month.

3. Separate business and personal expenses and reporting. Many business owners get business and personal financials tangled up. If you get a business credit card that’s just for business, tracking expenses and establishing a business credit score becomes a lot easier. 

4. Protect your personal credit ratings. Similarly, if you associate your personal credit scores with the business and something goes wrong, you’ll have a deeper hole to dig yourself out of.

Want to explore your options for unsecured lines of credit? Contact Skybridge today!