Unsecured Business Credit Lines
In a previous post we talked about the benefits of using our unsecured business credit lines. Now I have to say this definitely was a very popular post that generated quite a bit of questions and conversations so I thought it would be a good idea to cover this in today’s blog post.
Now for all you credit savvy business owners I’m sure we can all agree that access to unsecured credit lines that protect your personal credit while building business credit is the optimal choice.
In a previous post we compared our unsecured business credit lines with traditional business lines of credit, we covered the benefits, how to qualify and where to apply.
In this post I wanted to compare our unsecured business lines of credit with traditional business credit cards. Although each client that qualifies for our business credit lines gets issued a business credit card that carries either the Visa® or MasterCard® logo, there are big differences that need to be pointed out.
Clients that qualify for our program get issued anywhere from 3-4 unsecured business lines of credit with combined credit limits that can go up to as high as $200k with a 0% APR for the first 6-12 months. After the introductory period expires rates are approximately 12-15% APR. The minimum monthly payment on these credit lines is 2 percent of the balance owing.
Keep in mind these credit lines are not loans they are revolving lines of credit. You have access to the funds anytime your business needs it and you only pay finance charges on funds you use from your credit lines. You can use the funds for anything your business needs and there are no restrictions.
So how do these unsecured business lines of credit compare to typical business credit cards?
Here are three major and distinct differences:
1) Higher Credit Limits: Typical business credit cards that you can obtain online or from your bank issue much more conservative credit limits compared to our unsecured business lines of credit. Even with stellar credit ratings typical business credit cards carry much lower credit limits where our unsecured credit lines can go up to $200k.
2) Credit Reporting: Typical business credit cards such as the Spark® Classic for Business report your credit card payment history to both personal and business credit reports. As a result your company’s credit card purchases and revolving debt have a direct impact to your personal credit and credit utilization which ultimately affects your personal FICO® Scores.
Our unsecured business lines of credit report only to your company’s credit reports. This shields you as a business owner from your company’s credit card purchases and debts reporting on your own personal credit reports.
3) Cash Advance Fees – Typical business credit cards may allow you to write cash advance checks against your credit line but charge an increased APR of typically over 20% interest. For example, Capital One’s Spark® Cash for Business charges 24.9% APR for cash advances.
Compared to our unsecured credit lines, we allow you to pull a lump sum of cash out of your credit lines for only 6% while avoiding the costly cash advance fees. This is also a popular option for real estate investors who need a large cash amount to execute a real estate deal compared to dealing with the hefty interest rate charged by a hard money lender.
On a final note, I want to clarify what is required when using a credit partner to qualify for our unsecured business credit lines. If you decide to use a credit partner they are not required to own a percentage of your business, however the funding amount you qualify for will generally be higher if they are on the articles of incorporation as an officer of the business.
Until next time.
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About the author
Marco Carbajo is a business credit expert, author, speaker, and founder of the Business Credit Insiders Circle. He is a business credit blogger for Dun and Bradstreet Credibility Corp, the SBA.gov Community, About.com and All Business.com. His articles and blog; Business Credit Blogger.com, have been featured in ‘Fox Small Business’,’American Express Small Business’, ‘Business Week’, ‘The Washington Post’, ‘The New York Times’, ‘The San Francisco Tribune’,‘Alltop’, and ‘Entrepreneur Connect’.