How to Increase Your Existing Business Line of Credit

17 Aug, 2017 / Comments: Comments Off on How to Increase Your Existing Business Line of Credit / By

As a small business owner, you may sometimes find yourself just barely making ends meet with no money left over to grow your business the way you want. A business line of credit can make the difference between being strapped for cash and having the extra funds you need to begin expanding. A business line of credit is a revolving line of credit that works similarly to a credit card that can help you to keep your vendors and your employees paid. Growing your business often means that you may need to increase your existing business line of credit to accomplish what you want each month.


Make Payments on Time

One of the most important things you can do as a borrower is to make your payments on time. Consistent on time payments show your lender that you are trustworthy. Keep in mind that it can take a little time to build up this trust. It is usually a good idea to make on time payments for at least six months before requesting an increase.


Pay Off Expenses

It is not uncommon to have both a business line of credit along with business loans and other types of debts. While this is not a problem, having your money going to multiple different payments every month limits your finances. Recently paying off a loan can free up a significant amount of money and can help you to get a business line of credit increase. Just be careful of prepayment penalties (if your loans have any) on any loans you are considering paying off early.


Do Not Neglect Your Personal Credit

Your personal credit score was an important factor in determining your eligibility for your initial business line of credit. It is also important for getting an increase. Showing you are responsible with your personal expenses shows lenders that you can be responsible with business expenses as well. Use the same principles to keep your personal credit intact, such as paying each of your bills on time, and paying off expenses as you can.


Offer More Collateral

Collateral is important for reducing the risk you pose as a borrower. In order to secure a higher business line of credit, it may be necessary to provide more collateral. This can be anything such as real estate or equipment. Providing more collateral helps to lessen the additional risk your lender would take giving you an increase. They have something tangible to see as a tradeoff for offering trust.


Increase Social Media Presence

It is not enough to just have a website anymore. Social media (Facebook, Twitter, Instagram, etc.) is a hugely popular way to promote your business and gain customers you might never have been able to reach otherwise. Having a strong social media presence may be helpful in gaining an increase in your business line of credit. Having a strong following on social media can show borrowers that you have strong support and are a business worthy of the investment.


Timing is Everything

Timing is key. Don’t ask for an increase when you are desperate. It is better to wait until your business is doing well. This gives you the opportunity to provide stronger financial statements. Keep in mind as well that the longer you have been in business, the better your chances of getting an increase.


It can take some time to build up the qualifications for an increase in your existing business line of credit. Consistently making payments on time and keeping your business running successfully can both help you to secure the funds you need to help your business continue to grow.


William Mahnic
William Mahnic is a Finance Professor at Case Western University and has spent more than 20 years in the finance industry before becoming a professor. Mahnic has appeared as a commentator on both TV and radio talk shows including NPR, Crain's Cleveland Business, WKYC 3 and The Washington Post. He has been interviewed in BusinessWeek, Wall Street Journal and The Los Angeles Times.

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