Published By Janet Gershen-Siegel at February 18, 2018
Written by Janet Gershen-Siegel
Would you like to learn how to get business credit cards? We can show you just how to get company credit cards the right way. But first, let’s talk about credit lines.
A credit line, or line of credit (LOC), is an arrangement between a bank or private investor that establishes a maximum loan balance that a borrower can access.
A borrower can get access to funds from their line of credit any time, so long as they don’t go over the maximum set in the arrangement, and as long as they meet any other conditions of the bank or investor like making on time payments.
Credit lines deliver many distinct benefits to borrowers including versatility. Borrowers can use of their line of credit and just pay interest on what they use. Compare this to loans where they pay interest on the total borrowed amount. Credit lines can be re-used, so as you acquire a balance and pay that balance off, you can use that accessible credit again, and again.
Credit lines are revolving accounts similar to credit cards, and are comparable to various other kinds of financing such as installment loans. Oftentimes, lines of credit are not secured, much the same as credit cards are. There are some credit lines that are secured, and hence easier to get approval for.
Credit lines are the most commonly requested loan type in the business world. But although business owners prefer them, authentic credit lines are uncommon, and challenging to find. Many are also very difficult to get approval for requiring good credit, good time in business, and good financials.
But there are various other credit cards and lines that few know about that are attainable for startup companies, poor credit, as well as if you have no financials.
Many credit line varieties that most business owners think of come from standard banks and standard banks use SBA loans as their principal loan product for small business owners. This is because SBA guarantees as much as 90% of the loan in the event of a default. These credit lines are the most challenging to get approval for because you must qualify with SBA and the bank.
There are two main types of SBA loans you can generally obtain. One form is called CAPLines. There are in fact five types of CAPLines that can work for your business.
You can also obtain a smaller loan amount faster using the SBA Express program. Most of these programs offer BOTH loans and revolving lines of credit.
According to the SBA: “CAPLines is the umbrella program under which SBA helps business owners meet short-term and cyclical working capital needs”. Loan amounts are available up to and including $5 million. Loan qualification requirements are the same as for other SBA programs.
This one advances against expected inventory and accounts receivables. It was developed to assist seasonal businesses. Loan or revolving are offered.
Finances the direct labor and material cost associated with executing assignable contracts. Loan or revolving are offered.
Designed for general contractors or builders constructing or renovating industrial or residential buildings. It is used to fund direct labor-and material costs, where the building project functions as the collateral. Loan or revolving are offered.
For businesses unable to meet credit standards connected with long-term credit. Financing for cyclical growth, repeating and/or short-term needs. Repayment results from converting short-term assets into cash. Businesses constantly draw from the LOC, based on preexisting assets, and pay back as their cash cycle dictates. This line ordinarily is utilized by businesses that supply credit to other companies.
This asset-based revolving line of credit of as much as $200,000. This line operates like a standard asset-based line except that a number of the more stringent servicing requirements are foregone, so long as the business can consistently show repayment capability from available resources for the total.
You can get approval for as much as $350,000. Interest rates can be different, with SBA enabling banks to charge as much as 6.5% over their base rate. Loans over $25,000 will require collateral.
To get approval you’ll need good personal and business credit. Plus the SBA specifies you must not have any blemishes on your report. You will need good bank credit; an acceptable bank score demands you have at least $10,000 in your account over the most recent 90 days.
You’ll also need a resume showing you have business sector experience and a well put together business plan. You will need three years of business and personal tax returns, and your business returns should show a profit.
And, bring a recent balance sheet and income statement, therefore showing you have the cash to repay the loan.
To get approval you’ll need account receivables, but only if you have them. When it comes to the collateral to counterbalance the risk, commonly all business assets will be taken as collateral, and some personal assets including your home. It’s not uncommon to need collateral equivalent to 50% or more of the loan amount. You also need articles of incorporation, business licenses, contracts with all third parties, and your lease.
Private investors and alternative lenders also offer credit lines. These are less complicated to get approval for than conventional SBA loans. They also require much less documentation for approval. These alternative SBA credit lines commonly demand good personal credit for approval.
Unlike with SBA, many of them don’t need good bank or business credit approval. Most of these types of programs call for two years’ of tax returns. Tax returns need to demonstrate a profit. Rates can vary from 7% or greater and loan amounts range from $25,000 into the millions.
Loan amounts are commonly based on the revenues and/or profits reflected on the tax returns. In some cases lenders may want other financials such as a profit and loss statement, balance sheets, and income statements.
Merchant cash advances have rapidly become the most popular way to get financing, in large part as a result of the simple qualification process. Businesses with $10,000 in earnings can get approval, with the business owner having scores as low as 500. Some sources have now even begun to offer credit lines that go with their loans.
You will need to have at least $10,000 in revenue for approval. You should be in business for at minimum one year, though three years is preferred. Lenders normally want to see a credit score of 650 or higher for approval.
Loan amounts are generally about $20,000. Lenders frequently will pull your business credit, so you should have some credit already established and in some cases lenders will want to see tax returns. Rates vary based upon risk for this program, and there aren’t a lot of funding sources who offer it.
You can get financing irrespective of personal credit if you have some sort of stocks or bonds. You can also get approval if you have somebody wanting to use their stocks or bonds as collateral for your financing. Personal credit quality doesn’t matter as there are no consumer credit criteria for approval.
You can get approval for as much as 90% of the value of your stocks or bonds. Rates are often less than 2%, making this one of the lowest rate credit lines you’ll ever see. You can nevertheless earn interest as you generally do on your stocks and bonds.
Credit cards normally offer 0% intro rates for up to two years. This is very helpful for startups especially. Also, credit lines allow you to take out more cash at a much cheaper rate than do cards. These are the main two differences that will affect you between credit cards and credit line. Investopedia even says that, “lines of credit are potentially useful hybrids of credit cards.”
Both cards and lines are revolving credit. Credit lines are more challenging to get approval for as card approvals are normally very fast, many times automated, while line require an in-depth underwriting review. Lines usually offer lower rates, per Bankrate card rates average 13% while lines average 4%.
The majority of them do report to the consumer credit reporting agencies. They all require a personal guarantee from you. You can get approval usually for one card max as they stop approving you when you have two or more inquiries on your report.
Most credit card providers feature business credit cards including Capital One, Chase, and American Express. These have rates similar to consumer rates and limits are also similar. Some of them report to the consumer reporting agencies, some report to the business bureaus. Approval requirements resemble consumer credit card accounts.
Generally, when you apply for a credit card you put an inquiry on your consumer report. When other lenders see these, they won’t approve you for more credit since they have no idea how much other new credit you have recently obtain. So they’ll only approve you if you have fewer than two inquiries on your report within the most recent six months. Anymore will get you refused.
With unsecured business financing, you work with a lender who focuses on securing business credit cards. This is a very rare, very little know about program that few lending sources offer. They can commonly get you three to five times the approvals that you can get on your own.
This is because they are familiar with the sources to apply for, the order to apply, and can time their applications so the card issuers won’t decline you for the other card inquiries. Individual approvals frequently range from $2,000 – 50,000.
The end result of their services is that you normally get up to five cards that resemble the credit limits of your highest limit accounts now. Multiple cards create competition, and this means you can get a raise in your limits typically within 6 months or less of initial approval. Approvals can go up to $150,000 per entity such as a corporation.
With UBF they actually get you three to five business credit cards which report solely to the business credit reporting agencies. This is huge, something the majority of lenders don’t offer or promote. Not only will you get funds, but you build your business credit also so within three to four months, you can then use your newly established business credit to get even more money.
The lender can also get you very low introductory rates, typically 0% for 6-18 months. You’ll then pay normal rates after that, typically 5-21% APR with 20-25% APR for cash advances. And they’ll also get you the very best cards for points, which means you get the best rewards. Much like with just about anything, there are big benefits in working with a source who concentrates on this area; the results will be much better than if you try to go at it by yourself.
You have to have excellent personal credit right now, ideally 685 or better scores, the same as with all business credit cards. You shouldn’t have any derogatory credit reported to get approval, you must also have open revolving credit on your consumer reports right now and you’ll have to have five inquiries or less in the most recent six months reported.
All lenders within this space charge a 9-15% success based fee. But you only pay the fee off of what you secure.So you get a lot of additional rewards. You also get about three to five times more cash through this program than you would get on your own. Hence this is why there’s a fee, the same as all other lending programs.
You can get approval using a guarantor and you can even use various guarantors to get even more money. There are even other cards you can get using this very same program but these cards only report to the consumer reporting agencies, not the business reporting agencies. They are consumer credit cards as opposed to business credit cards.
They deliver similar benefits which include 0% intro APRs and five times the amount of approval of a solitary card but they’re much easier to qualify for. You can get approval with a 650 score and seven inquiries (or fewer) in the last six months and you can have a bankruptcy on your credit and other negative items. These are a lot easier to get approval for than UBF corporate credit cards.
With all preceding cards, you should have good consumer credit to get approval but what if your personal credit isn’t good, and you do not have a guarantor? This is the time when building company credit makes a ton of sense even though you have good personal credit, building your corporate credit helps you get even more money, and in the absence of a personal guarantee.
Building business credit is another means of how to get business credit cards.
Company credit is credit in a company name, associated with the company’s EIN number, and not the owner’s Social Security Number. When built properly, you can get business credit without a personal credit check and no personal guarantee. So this is something all other cards above can’t provide. You can get three types of corporate credit cards.
Start with vendor credit, which offers net 20 terms used to start a business credit profile. Then there’s store credit: get credit cards with high limits at most establishments. Next come cash and fleet credit, where you can get Visa, MasterCard, American Express cards you can use anywhere. You can get these without any credit check or guarantee. Limits are often $5,000 – $10,000 to start, and can exceed $50,000.
Now this is how to get business credit cards!
Your small business can get credit cards and financing, if you know where to look. Learn more here and learn how to get business credit cards.