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Alternatives to Unsecured Business Lines of CreditUnsecured business lines of credit are the hardest kinds of credit that can be obtained from a bank or financial institutions. Applicants of these loans have to meet certain criteria such as having been in business for a minimum of one year, having a credit score of more than 680, having a good credit history and profile. Banks have accepted openly that nearly 90% of such loan applications for unsecured lines of credit are rejected. There are alternatives to unsecured business lines of credit.Short Term Bank LoansMost of these short-term loans do not require collateral and are unsecured. Their duration may vary from 90 - 120 days to 1 - 3 years. Banks are very specific about repayment plans and will grant loans only after they have scrutinized the cash- flow history, payment record, credit score and profile. Although the rate of interest is fixed, you will pay less since the interest is repaid quickly.Secured Business Line of CreditA secured business line of credit is far better alternative, as the interest rate is considerably lower. Hard goods such as equipment, real estate, stocks or bonds, other personal assets, personal guarantees or asset owned by the business are given as collateral. Up to 10 times more credit can be obtained as compared to unsecured line of credit owing to the collateral that has been pledged. Most small businesses prefer the higher credit limit and flexibility that a secured line of credit offers.Equipment Sale Lease BackIf the business owns any equipment worth more than $10,000, it can be sold to the creditors and leased back. This kind of loan gives the business the amount of cash it needs and they would have to make a token payment as lease for the equipment.Merchant Account Cash AdvanceThis is another alternative to unsecured business lines of credit. If credit cards such as VISA/ MasterCard are accepted by the business for at least 6 months, they can get a cash advance based on their monthly volume of charges. The only perquisite is no history of bankruptcy in the last 3 years.Home Equity LoanThe business owner may use his/her home as collateral and secure a home equity loan. They take risk of losing the home as well as the business if the loan is not repaid on time.Long-Term Bank LoansThese loans last for 3 to 7 years duration and repayment is made on installment basis. The interest rate is fixed and lower than that of a short-term loan.Industry Specific LoansIt is another alternative to unsecured business lines of credit.Pollution Control LoansThis kind of loan is suitable if your business designs, builds, install, or services pollution control facilities.Once the amount of cash needed has been determined, examine all the options and study what kind of a loan best suits your need, knowing exactly how to make the best use of the loan. Having a repayment plan ready and working towards a debt-free life with hard work and determination will certainly ensure success. A high interest loan, such as, an unsecured business line of credit may be more costly than you bargained for, make an informed decision after careful consideration. Several companies offer excellent softwares to help manage the financial aspect of your business, making the task of running the business and maintaining records a fairly easy job.
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