How to secure a line of credit

If your business suffers inconsistent cash flow highs and lows, chances are that you have considered using a line of credit to remain flexible in slow periods.

A line of credit can take many forms, but generally speaking it can be secured by placing a registered mortgage on a property. Although using property as collateral can be risky, interest rates will often be a lot lower than other funding options due to the security of the investment.

But what's the best way to get approval for a line of credit? There are many things you can do to improve your chances, but we've found three key tips that can help.

Find a bank that works for you

Consider your business, its size, its customers and how big it could realistically grow. It's important you find a bank that matches your business goals and ambitions.

Smaller banks are a good option for micro businesses starting out as they offer a more personalised service. On the other hand, larger banks may be better equipped to meet your needs if your business is going through a growth period.

Track all financial reporting

After you pick a suitable financial institution it's essential you start compiling the financial reports that will help your application get accepted. Banks want to know how secure their investment will be and even though you have collateral to ease their mind, banks will still be hesitant to lend money to businesses with cash flow troubles.

Comprehensive reporting is also a good habit to develop, as the benefits spread beyond loan applications.

Consider alternative funding as well

In the instance your line of credit isn't approved try to receive feedback from the bank and then consider alternative funding options that can keep you moving forward. Although a line of credit is more convenient and flexible, there are other options you can use depending on what you need the money for and your business position.

Click here to find some more funding options that are available to you!

Securing a line of credit can be a great option for your business if you have seasonal or sporadic cash flow fortune.

The key to receiving an application approval is to find a suitable bank and present them with all the relevant financial documentation to show how youplan on making repayments. More importantly, in the instance your application is rejected, don't stress as there are other alternatives available.

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