Avoid These 5 Mistakes When Applying for a Business Line of Credit
Your business is off to a pretty good start. Everything seems to be moving along at a pretty decent pace until it stops. Half of your computers get infected with a virus. Your inventory is down due to a delay in shipping. Your costs are skyrocketing, and yet your cash flow is down to nothing. Your business needs an infusion of cash now. Lines of credit offer the opportunity for business owners to get money when they need it. When applying for a business line of credit, try to avoid these five pitfalls.
- Waiting To Apply
Perhaps you believed something would come up that would give you a solution to your financial woes. Unfortunately, that never happened which left you in even more of a bind. Waiting too long to apply for a line of credit all but closes the door on getting the money you need quickly. The application process can take some time as can funding.
- Rushing the Application
When you wait too long, you may feel pressured to get the application and underwriting process done faster. When you rush, you tend to leave things out or provide the wrong information entirely. This can decrease your chances of approval or stop the process entirely.
- Not Having the Proper Information at Hand
Applications for business lines of credit take detail. You must be prepared to provide supporting documentation quickly and get your hands on any additional information the lender requests. It won’t do any good to start an application without having all your paperwork gathered.
- Not Knowing Why You Need the Money
One of the things lenders that offer lines of credit ask is what you intend to use the funds for. If you don’t have a plan in place for divvying up the money, you may wind up limiting the amount available to you. Instead, go into the meeting and application process with a clear vision and details about what you intend to do with the cash.
- Intentionally Misleading the Lender
You don’t want to make your business seem less-than, and as a result, you decide to paint a pretty and harmonious picture. The lender will find out that what you formerly represented is not true. As you provide financials and support documents for your business, all will be revealed. Your credibility, however, will be shot.
Business lines of credit are a great way to get funds to make large purchases or do some inventory stocking. Apply early enough that you can take advantage of this opportunity.
