There are several types of credit lines available, and it’s important to choose the best small business credit line type for your business if you need financing. Some options are only available to businesses with well-established business credit, but others are also useful in helping you to build business credit early on. Here are a few examples of types of small business credit lines, to help you choose the right options for your needs.
Business Credit Cards – Business credit cards can offer your small business a revolving business credit line in small to large amounts. You can use a business credit card for just about any type of business expense, from startup expenses to day-to-day purchases like office supplies.
Working Capital Line of Credit – This is a usually shorter-term business bank loan to help you cover traditional operating expenses for a set period of time.
Business Loans – You can also secure longer-term business bank loans, which can be used for anything from startup capital to financing for business growth or major purchases.
Supplier / Vendor Credit – Many suppliers and vendors will extend small business credit lines to regular customers. Some do this through store credit cards for business owners, and others simply allow purchases to be made on credit and be billed later through various payment terms.
In order to secure most types of small business credit lines, your small business will need to have good business credit. Just as it’s important to monitor your personal credit report, it’s vital that you fix credit report mistakes for your business as quickly as possible to avoid being denied financing over potential errors. It’s important that you monitor your business credit report and business credit score (which in most cases are different than the business owner’s personal credit score and report), and report any inaccuracies immediately to the credit bureaus and credit scoring companies like Myfico so errors don’t impede on your ability to later get business credit.