Creating an E-commerce Business Line Of Credit
During periods of low cash flow, many business owners will consider applying for a business line of credit. A business line of credit can be a viable means of having access to cash when needed, but along with this advantage comes disadvantages. At the same time, these are often extremely essential for e-commerce businesses. On the whole, they have far more difficulty getting funding from some of the traditional lenders that may perceive them as riskier. Before going into e-commerce applications, let’s explain what a business line of credit is.
What Is A Business Line of Credit?
A business line of credit is a type of business loan designed for helping businesses meet their short-term cash flow needs. Credit is more versatile in usage than other types of funding. Business owners can use this for anything business related. These applications range from operating expenses to purchasing new equipment and payroll. Think of a line of credit as pre-approved access to funds when they are needed.
For repayment, after borrowing from your business line of credit, you must make repayments on the amount borrowed. The amount you repay is contingent on what you borrow. The more you borrow, the higher the repayment amount, and you can not exceed the pre-approved credit limit. Interest rates are generally higher than standard business loans but lower than credit cards.
Depending on the type of business, certain businesses may find a line of credit ideal. Many prefer to save on interest when compared to holding a business credit card. Others prefer the convenience of which having a line of credit provides them. Many businesses will need to seek funding solutions at times. It’s also important to ensure you apply for the financial product that best suits your individual needs. All of these types of issues can appear in an e-commerce business, making a business line of credit appealing. At the same time, though, there are several things that may keep you from getting this credit. Here’re some of the major items you’ll need for a business line of credit.
What You Need:
- A Good Credit History. Make sure all business accounts such as utilities and bank accounts are in your business name and that invoices are always paid in full on time. This will help slowly build good credit.
- Cash Flow. Your business will also need to demonstrate positive cash flow prior to approval of a line of credit. This can be a difficult requirement to meet because having a positive cash flow would likely reduce the need for a line of credit.
- Good Credit. Keep your other business credit accounts in order. Don’t max out your business credit card then apply for a line of credit. This alone can lead to your rejection as it appears to the lender your business is not capable of making repayments.
- Collateral. Collateral is essential in many cases to secure your line of credit. This provides the lender with a way to recoup if you cannot pay.
A business line of credit is useful, and banks treat them as easy to obtain, convenient and flexible. The reality is they’re often difficult to obtain and not as convenient you may think.
For one, if cash flow is a concern, it doesn’t help to have differing repayment amounts per month. It’s much easier to budget for set repayments each month when cash flow is a concern.
In addition, if your e-commerce business is struggling, this could hurt your chances. Banks still need to see concrete evidence of your ability to make repayments. This makes it very difficult for seasonal businesses to obtain a line of credit unless you can forecast your finance needs well in advance.
A New Option
eBusiness Funding helps businesses that may struggle with traditional lenders. In addition, we work to support those or are unable to qualify for options like a business line of credit. To do this, we provide merchant cash advances that are accessible to a wider spread of businesses than bank loans or private lenders. This combines some of the positives of business lines of credit while missing some of the negatives. 95% of businesses that meet our simple requirements qualify for funding. All you need is to be in business for at least six months, with over $10,000 in monthly revenue. With us, it’s not about past credit history or collateral, but about your business’s potential.
It’s important to us that you use the funds we offer in the most helpful way possible, so we place no restrictions on how you spend our advances. Payroll, expansion, repairs, spend on what you need! We also get you your funds fast, sometimes as soon as 72 hours after you first apply. Repayment is also very simple. Rather than large monthly payments, we take an established percentage of your future sales. This is set up by our skilled consultants. This percentage stays the same, so if business slows down, you pay less.
Interested? If you’re ready to begin, all you need to do to start is fill out this simple contact form. We’ll be waiting, and are looking forward to helping your business get the funding support it needs.