Unsercured Lines of Credit as Financing Alternative

By: Milton Franklin

Unsecured Lines of Credit are available for individuals that own businesses and have credit scores of 680 and above. Business owners who have been in business for more than two years are eligible for lines of credit up to $1 million with full documentation of personal and business taxes and financials. Applications without additional documentation (No Doc Applications) can also be approved for as much as $350,000. These lines of credit essentially function like Home Equity Lines of Credit because interest is paid only on the outstanding balance.

Unsecured Lines of Credit can be obtained in roughly 4 to 6 weeks but should never be applied for directly by the borrowers themselves. Being qualified does not mean that these borrowers are capable of simply walking into a bank or other lending institution and being approved. Companies that specialize in unsecured lines of credit are available and should be contacted to assist with the substantial preparation that is necessary. Professional business finance consulting firms maintain contacts and affiliations with lending institutions that offer unsecured lines of credit. It is extremely important that the business owner work with one of these firms instead of approaching the bank directly. The application process is somewhat complicated and documentation must be properly formatted and compiled to avoid unnecessary rejections.

Business owners can no longer rely on the equity in their real estate holdings to finance their business expansions and growth. Despite the fact that they paid high fees for the availability of home equity lines of credit, even business owners with excellent credit scores and excess equity in their properties are finding it impossible to access their credit lines. The main reason is that banks have virtually stopped providing homeowners access to the equity in their properties as lines of credit. Home Equity Lines of Credit have been frozen by most major lenders because declining property values have made these cutbacks necessary. IndyMac, Washington Mutual and other major mortgage lenders have made decisions to rescind these credit lines, according to the terms of their contracts with borrowers.

These recent eliminations of access to funds for their businesses have hit business owners especially hard. Many of them have used home equity lines for working capital during slow periods or as sources for cash during periods of expansion. The net result is that expected funds for business uses are not available, although they are still very necessary. The lack of time to make other arrangements because of this sudden policy change can severely impact a business owner's ability to survive a shortage of funds. Many business owners routinely paid back their lines of credit so that those funds are available for them to use at some pre-determined time in the future. That option is no longer available, leaving them without their usual funds.

In summary, Unsecured Business Lines of Credit are methods of financing that are still available to qualified borrowers who are also business owners. Firms that specialize in acquiring unsecured lines of credit should always be involved in this application process. The applicant will need assistance in properly preparing and organizing his documentation for submission to lenders. By adhering to the current credit, submission and underwriting guidelines of each individual bank, a firm that specializes in this type of financing will be able to present the borrower as the "perfect applicant". This very important initial step in the process will greatly enhance the business owner's potential to be successfully approved for an unsecured line of credit.

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