There will be times when your business needs additional funding, whether you are looking to purchase new equipment, open a new location or start a new project. Loans can be useful in many circumstances, but they are not your only option. Lines of credit are great if you want to have regular access to extra cash. When you are applying for credit, the lender or financial institution will look at a few things to determine if you are a good fit.

1. Time In Business

More established businesses will have an easier time getting credit. This is because newer businesses are more of a financial risk for lenders. If you have been in business for a while and have shown yourself to be successful, it will be easier for you to get credit. 

2. Available Collateral

Lines of credit can be secured or unsecured. If it is secured, that means that it is guaranteed by collateral. If you are applying for this type of credit, then the amount of collateral you have available will be a factor in your approval and may also affect your credit limit. You can use real estate, equipment, inventory and other assets as collateral to secure your credit line.

3. Credit History

It makes sense that a lender offering credit to your company will be interested in your credit history. If you have had trouble making payments on time in the past, then they may wonder if you will be able to do so in the future. If you have a low credit score or you don’t have much credit history at all, qualifying for additional credit may be difficult. If you are offered a low credit limit, use this to your advantage. Make small purchases and make payments on time or early to build your credit back up.

4. Annual Revenue

The amount of money your business makes can affect your ability to pay back what you borrow. Some lenders have minimum revenue requirements for loans and credit. If your revenue is low, then a lender may be hesitant to give you a credit line.

If your business is lacking in any of these areas, it does not necessarily mean that you will be unable to get lines of credit. Each lender has their own requirements and you may be able to find one that will work with you. However, improving on these factors can make it easier for you to qualify for credit and other financing in the future.