Business Line of Credit

Business Line of Credit

Lines up to $1,000,000

Use a business line of credit to help with cash flow

Prepare for seasonal expenses, cover unexpected costs, or bridge gaps in cash flow. You can choose from a variety of business credit options.

Ready to grow your business?

See how much you qualify for:
Current monthly sales deposit average to your business bank account?
How much Working Capital would you like for your business?

What is a Business Line of Credit (BLC)?

A business line of unsecured credit works almost exactly like a business card. You can withdraw funds from your credit line at any time. You’ll be required to pay a minimum amount if you have a balance. Only the portion that you have borrowed is charged interest. When you pay a portion of your balance in full on time, the money is made available to you again. It’s because the majority of business credit lines are technically referred to as “revolving lines of credits”.

Small business lines of credit are a must-have because they can be crucial to the success of a business. You don’t have to apply for a small business loan every time you need money. Small businesses, as pointed out by the Small Business Administration (SBA), need cash to thrive and survive.

Online lenders make it simple to renew and apply for small business credit lines. Online lenders do not require tax returns or financial statements like traditional lenders. Many lenders will lower the credit limit of a small-business owner if they don’t provide tax returns or financial reports, but for short-term financing it may be possible to get the best line of credit without those documents.

How does a Business Line of Credit work?

You must pay interest on the money you borrow from your line of credit for small businesses, and you will also be required to make a minimum monthly payment. This is similar to business credit cards. Your first payment may be due at the end of the next week, depending on your lender. Your business credit line will replenish if you pay back what you owe on time. Your monthly payment, for example, is $200 and your interest rate is $10. Your credit line would increase by $190 if you returned $200. The interest rate you pay depends on the speed at which you pay off all of your debt.

You may be required to pay a fee in some cases (also known as a draw fee). A draw fee is charged every time you withdraw from your line of business credit. Draw fees typically range between 1.6% and 2.5%.

You’ll be given a term for repayment, but it’s only the date by which you must pay your entire balance. If you repay your entire balance by the due date, you will most likely be able to use the full credit line again. You can even pay your entire balance in advance to save interest. As long as you pay off the money you borrow, and do not exceed your credit limit you can keep your credit line.

Borrowing limits range between $1,000 and $1,000,000. Rates of interest start at 8% with terms up to 18 months.

Small business credit lines with higher rates and lower credit limits are reserved for unsecure business credit lines. You don’t require collateral. However, you may be required to sign a guarantee. Imagine a small-business owner who wants a larger total credit limit. They would then choose a secured line of business credit, pledging collateral like real estate.

Research, Facts & Reports on Business Credit Lines

They were more likely to apply for credit with an online lender than a smaller bank (41%). They were also more likely to use an online lender rather than a smaller bank (41%). Source: Small Business Credit Survey Some applicants do not receive the entire amount requested. Nearly half (47%) of applicants reported that they received half the amount requested. Source: Small Business Credit Survey

What Are the Advantages of a Line of Credit for Business?

You must pay interest and monthly payments on a traditional small business loan. Even if you don’t use any of the borrowed capital, payments begin immediately. You only pay the minimum amount when you use your small business credit line. Some lenders offer an access card that can be used in store and online.

Small business lines of credit are the best solution to unexpected situations. In the world of business, it happens all the time. Every company will need some extra cash. You may find that a retail item is attracting an unexpected amount of demand. You are on the verge selling out, but you don’t have enough money to buy more. A business line of credit can be very useful.

Demand can also drop unexpectedly. A business line of credit can act as a cushion to allow you to run your business.

You could also look at other options like small businesses loans. You’d need to look for rates that are affordable, prepare documents, complete applications, etc. The business line of credit is a credit that you keep in your pocket.
Business credit lines have higher borrowing limits than business credit cards. Your interest rate will increase if you borrow near your credit limit on a business card.

Business lines of credit are typically less restrictive than other options. It is not necessary to have excellent credit, a high revenue or to be in business for more than a year to get enough money to keep your business alive in an emergency.

What Are the Disadvantages of Business Lines of Credit?

In the last decade, access to business credit lines has increased. Online lenders are able to approve secured and unsecured credit lines in less than 24 hours even if your credit is bad. These products have higher rates of interest. You might only be able access $1,000,000.

In exchange for higher requirements, a traditional business lending might offer lower rates or higher borrowing limits. For example, you may need to have a high annual income, two years of business experience, and excellent credit. You may also be required to provide collateral.

A business line of credits has another disadvantage: the best time to use it is before you actually need it. When your business is performing well, you can access larger borrowing amounts at lower rates. If your cash flow is suffering, you won’t have the same access to conveniences.

This leads to a major reason why business credit lines aren’t popular. The majority of business owners are extremely busy. To get the maximum credit limit, you must make time in your busy schedule to apply. Small business loans are often the last thing that people think about when their business is doing well. When you’re not in need of money, it’s natural to forget about getting a loan.

How to Apply for a Business Line Of Credit

Small businesses that are eligible must have been in business at least six month and have a credit score below 575. You will also need to prove that your business is currently profitable. You can receive funding in as little as 1-3 days if you are approved.

How to start

Your Business Line of Credit Gets Set Up – Now What?

It’s not just about getting financing for your business. This is a great opportunity to start building or improving your credit.
No matter what type of loan you receive, be sure to make your payments on time. Keep your credit balance under the credit limit if you have a business credit card or other revolving form of credit.
Making your payments consistently on time will improve your credit. This will give you the best rates and terms for your next business loan.

What if I am declined for a business line of credit?

If you are declined for a small-business line of credit, this could be because it is not the best tool to meet your needs. We may recommend alternative loan options, such as working-capital-loan-offers or unsecured lines of credit, like business credit cards or even a personal loan. Both of these can be obtained from our partners. If you request working capital again, the outcome may be different. You will also learn which expenses are covered by business credit cards , and how best to utilize your borrowing limit.

You may have been declined because of a poor credit score. You should then consider our credit repair services. We can boost your credit score by removing the problems that keep it low. If your business was rejected, we can help you improve your credit rating at business credit bureaus. The Small Business Administration (SBA) loans require excellent credit. It is therefore wise to improve your credit score both personally and professionally. Credit unions can also be a great source for business credit. Credit unions offer great rates and special programs to their members if they are members.

Testimonials

What Business Owners Like You Are Saying

Are you ready to expand your business? Find the best funding option for your business.

Scroll to Top

Get A Free Quote Today!

Current monthly sales deposit average to your business bank account?
How much Working Capital would you like for your business?