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One of the less popular forms of business lending today is the no doc business line of credit. Unlike a standard business credit line, no docs require no documentation of business budgets or operating costs, and rely almost exclusively on credit, assets and years of experience. High credit scores are usually required. Here are a few tips you can use to make sure that you are getting a good business line of credit.
First, make sure that there are no upfront fees. There are plenty of good lenders that make their money from the credit proceeds. You also want to make sure that the loan does not come with prepayment penalties or anything of that nature; straightforward, stable revolving interest rates are what you are looking for.
The requirements for a loan of $100,000 typically include two or more years in business, a credit score of 680, and homeownership. Although the loan is unsecured, lenders typically place a heavy amount of weight on whether the applicant is a homeowner. If you are approved, the bank will give you a book of checks. You can use these checks at any time to access the credit line, and there are absolutely no minimum purchases that have to be made. Because the interest rates for these lines are competitive, the interest rate for a no doc business line of credit will probably be 1% to 2.5% over the prime rate.
If you are not a homeowner, or have not been in business very long, then the chances of getting a six-figure credit line are slim. A useful technique that can be applied instead is to apply for a number of smaller SBA loans all at once. A few good lines of credit can be just as good as a single large credit line, and if all the loans are applied for at once, it will not have any more negative pull on your credit score than had you just applied for one no doc business line of credit. This technique should easily get you over $100,000 in credit line.
