How to Raise a Business Line of Credit

Finding money to start, expand or just operate a business is sometimes difficult. A business line of credit provides a pre-determined amount of cash for expenses. The lender may or may not require collateral. In addition, some lines of credit allow the businessperson to borrow against money owed, but not yet received, from clients.

Difficulty: Moderate

Instructions

1. Fill out a financial request form provided by the bank. Each bank has their own format but in general, they will require your name, social security number and a copy of your last two or three years of tax returns. They will also want to know why you are requesting an increase.

2. State the reason you're requesting a higher monetary level. If you can show that you typically have a certain amount of receivable assets, that is money that you have already performed a service for, yet have not received, there is a good chance you will get the raise.

3. Allow a lien against your personal property or company assets if the bank requires security for the raise in your credit line. No one likes to sign away his or her property but you may have to do just that if the raise in your credit line does not have sufficient accounts receivable backing.

4. Receive a lower interest rate for a business line of credit than you would if you purchased the items you need with a credit card. Traditionally, rates for a line of credit are much lower than those charged on credit cards. In addition, you will need to do your business banking at the same location.

5. Pay down on your line of credit regularly to show the bank they are not taking a risk by raising your credit limit. Although some credit lines have maturity dates, many are ongoing and the businessperson will draw capital as needed and repay it. Interest accrues only on the time the money is not in the account.

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