As a tile setter, you may need a loan to finance your business. However, it can be difficult to figure out which ones fit your needs. You’ve likely heard of personal loans, SBA loans, and perhaps even business lines of credit. And while they’re all useful, you may only need one.
The purpose of this blog is to discuss the advantages of a business line of credit for tile setters and to help you decide whether it’s the right choice for you.
Advantages of a business line of credit for tile setters.
And to cut to the chase, we’ll discuss the points below:
- What is a business line of credit?
- How do you qualify for a business line of credit?
- Where can you get a business line of credit?
- What are the benefits of a business line of credit?
For tile setters: What is a business line of credit?
To define it as simply as possible, a business line of credit is a revolving credit where financial institutions offer specific amounts of cash for an undetermined period. And whenever you take out cash, you pay interest only on the money you use, and not the total amount of credit available.
So, as long as you pay off the debt and interest, you can continuously use the credit up to the maximum limit (resetting the cap each time). There are no monthly payments, and interest is based entirely on the money you use.
For tile setters: How do you qualify for a business line of credit?
As a tile setter, there a few things you need to know when it comes to qualifying for a business line of credit. Financial institutions like to look at the Three Cs: Credit, Cash Flow, and Collateral.
When it comes to credit, they look at anything between 600 and 800; however, the ideal score is 660+. As for cash flow, they like to see time in business, monthly/annual revenue, and the current amount of money in your business account (Ideally have $1,000 – $5,000, minimum). And in terms of collateral, you would be putting assets up such as your home, business, car, and so on in case of a default.
It’s good to note that you only need one of the Three Cs to qualify and they are offered as unsecured or secured.
For tile setters: Where can you get a business line of credit?
Banks: While you’re able to get a business line of credit from banks, they’re usually much harder to qualify for and require more paperwork. You’ll need to provide your business and personal tax returns, documentation for business registration, and financials. And to top it off, you’ll have to submit to an annual financial review.
Alternative financial institutions: If you were to pursue alternative financial institutions, you’d have more flexibility. There’s typically less paperwork, documentation, and the qualifications are a bit easier. The payment terms, interest, and so on depend on the agreements made between you and the lenders. There is also no annual financial review.
For tile setters: What are the advantages of a business line of credit?
Quick access to money: Tile setters are able to use the money exactly when they need it once they’ve established a business line of credit.
Flexibility: Tile setters can use the money in whichever way they need to for their business. There are also flexible payment periods.
Higher credit limits: If a tiler setter needs to make a big purchase, they can put it on their business line of credit and pay only the money used back (plus interest).
Credit history is separate: Business line of credit isn’t the same as your personal credit, so if one isn’t doing as well as the other, it won’t have a domino effect.
Builds your credit up: As long as you make your payments on time and do so consistently, your credit score will shoot up; providing better loan options, interest rates, and so on in the future.
Finance Factory helps tile setters establish business lines of credit.
Interested in finding funding for your business? Finance Factory would love to help! If you’re looking to fund your business within the next 30 to 90 days for $25,000 to $500,00 and have a credit score of 660 or better, let’s chat! Get pre-qualified right now with our quick-step pre-qualification form! And don’t worry, this will not result in a hard credit inquiry of sensitive information. We just want to learn more about you and your business. Click below to get started!