Part of running a business is knowing what kind of credit you need for it. If you’re deciding between secured and unsecured lines of credit there are many things you need to take into consideration before making a decision.

An Overview Of Business Credit Lines

Small business lines of credit all work the same way in many respects. One of them is that interest is only charged while you are actively borrowing money. Another is that when you do borrow money, in most cases it is placed in your business account within 24 hours.

Secured vs Unsecured Lines Of Credit

To get a secured line of credit for your business, you will have to put up collateral. This can include equipment that your business needs in order to be able to operate. However, you can avoid this by seeking unsecured lines, as long as your business credit is good and its finances are healthy. There can be some drawbacks to getting an unsecured loan. They include possible fees and interest rates that are higher than what you would pay if you got a secured loan instead. It’s also important to note that you’ll likely have a lower credit limit if you choose unsecured instead of secured.

Obtaining unsecured lines of credit often requires you to make a personal guarantee to the lender. This is an agreement you will have to sign that states if you can’t pay the credit back using revenue from your business, you’ll have to pay using your own personal bank account. It should be noted that in some cases, you may have to do the same thing with a secured line of credit.

Unsecured lines of credit are ideal solutions for new and small businesses that may not have the collateral or financial histories to get financing from traditional lenders or credit providers. For more information on unsecured lines of credit, contact Rushview Commercial Funding.