Having a high business finance score means your business has several options for quick cash to meet business expenses. One way to access funds fast is to take out a line of credit. A line of credit can be approved in a matter of days, however, credit options come with higher interest rates than other loans, so we often recommend clients evaluate a number of funding options in addition to applying for a line of credit. When you and the lender have agreed on a working capital line, a secured line, or an unsecured line, your business can borrow up to the line’s credit limit. As you pay down the balance you will be able to draw on the line of credit, keeping your business moving, one transaction at a time.

Working Capital

Working capital is a general type of funding that allows your business to access cash and to apply it to any direct cost of doing business. From payroll to covering invoices, working capital keeps your business nimble. If you’ve recently expanded your team, get financing to equip the new team members with computers, desks, and office supplies. Maybe your business has been outsourcing part of its workload and has decided to reintegrate those duties back under one roof. Use working capital to pay a sign on bonus to attract a particularly high performing new hire. As long as you’re meeting the terms of your agreement with the lender, you can borrow multiple times against your balance.

Unsecured Line of Credit

It isn’t always necessary to put up collateral to finance a business loan. If your business has a high business finance score, you may qualify for an unsecured line of credit. These loans don’t require real estate, equipment, or inventory collateral to secure. Terms are usually flexible but may require significant documentation to satisfy the lender during the application process. Higher interest rates may also apply. However, assets do not have to be evaluated by a lender, so approval may come much faster than traditional loans. Plus, you can borrow less than your approved credit limit should you need to reserve the remainder for future expenses.

Secured Line of Credit

In the event that your business doesn’t qualify for an unsecured line of credit, or you are seeking a line of credit larger than you are otherwise approved, consider a secured line of credit. These funds are secured with collateral like real estate, equipment, or inventory. The lender evaluates the value of the chosen assets and offers a percentage of their worth to the borrower. Once terms are agreed upon, a lien is placed on the property by the lender so they can recuperate the cost of the loan should the borrower fail to satisfy those terms. This type of financing usually has a lower interest rate and a high credit limit, because it is secured by collateral.

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