What is a Business Line of Credit?
A business line of credit is a revolving account that allows access to a fixed amount of capital, which can be used when needed to meet short-term business needs. A business line of credit is the best financing option when you need extra working capital to cover recurring business expenses or bridge cash flow gaps. With ongoing access to funds, you have the flexibility to withdraw only what you need, when you need it—and pay for only what you use. So, you’ll be prepared for whatever challenges and opportunities come your way.
Fast Funding For Your Business
Unlike a term loan, a business line of credit allows you to run your business without having to apply for a new loan every time you need a bit of extra cash. And with ongoing access to working capital, you can plan for and better manage your business’s future cash flow with less stress. Your line of credit can give you the boost you need to take advantage of opportunities when they arise.
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One of the main benefits to having a business line of credit, is that it’s revolving. That means you can access the credit line when you need it, pay down the balance, and use the line again as funds replenish.
Secured LOC
A secured business line of credit requires a business to pledge assets as collateral to secure the line. Lenders typically ask for short-term assets, such as accounts receivable or inventory.
Unsecured LOC
An unsecured business line of credit does not require a business to pledge assets as collateral to secure the line. Lenders typically require the business owner to have a strong credit profile.
Startup Funding
Lines of credit can be an ideal funding solution for startups and pre-revenue business. Lenders typically require the business owner to have a strong credit profile.
Business Line of Credit Details
Qualifying Criteria
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Credit score: 680+
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Utilization: below 30%
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No recent bankruptcies
Required Items
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Signed one page funding application
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3-5 most recent months company bank statements (not all cases)
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Full tri-merged credit report
Advantages & Disadvantages
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Only pay interest on the amount you use, rather than the total amount funded
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Lines of credit are flexible as long as you stay within your credit limit, making them an ideal solution for stabilizing cash flows and covering essential expenses
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Great opportunity to build business credit
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It can be difficult to increase your credit limit
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Lines of credit often have lower borrowing limits and fees and additional charges can add up if used irresponsibly
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Business lines of credit can be more difficult to qualify for than other financing options