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What’s a business owner to do when their equipment breaks down or becomes obsolete? You could spend money on costly repairs or take this opportunity to invest in machinery that meets your changing business needs.

There’s no denying how expensive new equipment can be, and that’s where equipment financing can really save the day. Today’s business equipment loans not only help you stay on track, but they can position you to invest in strategic upgrades without draining your cash reserves.

Why equipment upgrades drive growth.

Businesses face increasing challenges due to rising materials costs and customer demand for bigger and better experiences. If your equipment can’t keep up, you may disappoint buyers.

A coffee house, for example, could continue ordering parts for a 10-year-old espresso machine.

However, just one day waiting for that part could reduce sales during the busy holiday season, and doesn’t guarantee that another part won’t break soon after. It may even be difficult to find someone to fix older machines, and they often lack the intuitive technology that churns out better brews in less time for a more discerning modern customer base.

Compare that to getting a new, energy-efficient espresso machine with more brewing varieties. Not only does it churn out drinks during your busiest days, but it can keep employees happy as they use equipment that actually makes their jobs easier (and fun!) Parts are likely readily available and may be covered under new equipment warranties and repair plans.

How equipment financing works.

The basic idea of equipment financing can be similar to a traditional term loan in that the borrower applies for a loan to purchase the equipment and begin using it right away. This loan, however, only applies to the purchase of equipment or machinery; funds can’t be used to cover payroll or pay off bad debts, for example.

The equipment becomes the collateral. It secures the loan and ensures the borrower repays the debt. If the borrower gets behind on payments or defaults, the lender can use the equipment to recoup costs. This collateral is a mechanism to reduce lender risk and make more borrowers eligible for financing.

Because the loan is only for equipment, it may require a smaller down payment and often comes with predictable monthly payments that small businesses can easily plan into their budget. There are no surprise balloon payments, and businesses know how many payments they have left to make at any time.

Each lender has its own equipment financing options, which may include:

• Equipment leasing, where a borrower can choose to keep or upgrade their equipment at the end of the repayment term
• Standard term loan, where the borrower owns the title to the equipment while they pay, but the lender has an interest in the equipment
• Line of credit, which can be used in amounts as big or small as needed to keep equipment maintained over time
• SBA loans, which may be larger and cover more expensive machinery upgrades

Equipment financing can be used for new or used equipment, software, and machinery, depending on each lender’s requirements.

When to consider a business equipment loan.

If your equipment is so outdated that a breakdown is imminent, it may make sense to be proactive and purchase newer equipment before you lose even a day of business. Other scenarios could include:

• When repairs cost more than new equipment, in either replacement parts or specialized labor
• When outdated technology no longer meets your changing business needs or can’t remain compliant with new industry rules or regulations
• When your business growth requires expansion in size, number, or scope of your machines
• When equipment allows you to beat your competitors to a new market or capitalize on demonstrated interest from your existing customer base

Evaluating ROI on equipment upgrades.

Try to avoid the “sunk cost fallacy” with regard to your machines. This is a way of thinking where you may be reluctant to abandon old machinery because you’ve already spent so much to keep it running (even if you could easily save money by switching to new equipment).

Instead, calculate the ROI when possible:

1. Estimate how much you’ll save and any new earnings from the new machinery.
2. Compare it to the total loan cost, including interest and fees.‍
3. Calculate how long it will take for you to pay back the equipment loan before you achieve profitability.

This ROI can tell you if you’re better off buying new equipment now or later. Don’t forget to include any tax benefits, such as Section 179 deductions for writing off the full purchase price of qualifying equipment. Financed equipment still counts for this benefit, even with depreciation. (Consult a qualified tax professional for personalized guidance and to maximize savings for your unique loan situation.)

Choosing and applying for the right equipment financing.

Consider these questions to help you pick the right financing:

• Do you need only financing for machinery and tech? You may be right for a standard equipment loan.
• Will you need to borrow again and again? A line of credit could suit you well.
• Do you favor long terms, lower rates, and larger amounts? An SBA loan may cover what you need.
  

Applying for any of these options can be as easy as following these steps:

1. Get quotes for the equipment that will best help you grow and stay competitive.
2. Gather financial statements that demonstrate your creditworthiness, including tax returns, profit and loss statements, and forecast reports.
3. Visit Lendio and submit one easy application in minutes.
4. Compare offers from 75+ vendors to find the best fit for your needs.
5. Select the right option and secure funding in weeks (not months).
6. Buy the equipment you need to boost your business!

While your equipment needs may be complicated, securing funding doesn’t have to be. Lendio simplifies financing to keep you running at peak capacity, any time of year.

From buildouts and equipment to software and payroll, dental and medical startup costs can quickly climb to six figures. And that’s just to get through the first few months.

The right financing can help cover those expenses, giving you time to find your footing and room to grow. It starts with understanding the types of loans available to healthcare professionals without practice revenue, learning how to qualify, and avoiding common cash flow mistakes that can derail your practice in its first year.

Typical startup costs for new medical practices.

Depending on your specialty, location, and growth plans, your total startup costs could range from $100,000 to $500,000 or more. Some of the most common medical startup expenses include:

• Office lease and buildout: Securing a space is often the largest startup expense. It may include costs such as security deposits, upfront rent, interior construction, and medical-grade flooring.
• Medical and diagnostic equipment: Making a practice patient-ready requires investments in equipment such as imaging machines, exam chairs, and sterilization tools, as well as basic items like gloves, stethoscopes, and blood pressure cuffs.
• IT systems and EHR software: Modern medical practices require advanced technology systems. Startups need to purchase computers, networking hardware, and the subscription, implementation, and training fees for an electronic health record (EHR) system.
• Licensing, insurance, and credentialing: This covers business licenses, malpractice insurance, facility insurance, and the costs associated with the provider credentialing process.‍
• Payroll for core staff: You’ll need to hire and pay a core team, such as a medical assistant, receptionist, and office manager, for at least a few weeks before the practice opens. These positions are critical for effective pre-launch setup and organization.

Securing sufficient financing well ahead of your launch may help preserve your personal finances while giving you the funding needed to give your practice a strong start.

Common types of medical practice loans.

Without revenue or financial history, securing a traditional small business loan may be a challenge. However, the following loans are commonly used to support new medical practices during their launch phase.

Healthcare startup loans.

Designed for zero-revenue operations, healthcare startup loans offer funding for anything from practice buildouts to working capital. They often provide 100% financing and offer favorable terms.

Equipment financing.

When you need to purchase major medical machinery, diagnostic tools, or office technology, equipment financing may be the right solution. These loans use equipment as collateral, often resulting in lower interest rates and small to no down payment requirements.

SBA loans.

These government-backed loans offer lower down payments, favorable rates, and longer repayment terms (up to 25 years for real estate). SBA loans are often used for larger funding needs, such as major practice buildouts or real estate purchases.

Business line of credit.

A startup business line of credit provides flexible access to cash. Since you only pay interest on the funds you use, it often acts as a cushion for temporary shortfalls, such as unexpected inventory needs, payroll, or operational expenses.

How to qualify for a medical startup loan.

When applying for a medical startup loan, lenders typically closely examine your personal financials, credit history, and how well-prepared you are for the launch. These key factors may strengthen your application:

• Personal credit score: Since the business has no credit history, the borrower’s personal credit score becomes a primary decision factor. A strong score indicates financial responsibility, which may make it easier to get approved and secure competitive interest rates.
• Business plan and projections: Presenting your lender with a detailed startup plan based on conservative projections shows that you’ve thought through the numbers and have a plan to repay the loan.
• Industry experience: Credentials, licensing, and work history assure the lender that your practice is legitimate and positioned to start earning revenue.‍
• Cash reserves or collateral: Some medical startup loans offer 100% financing, but having personal capital to contribute or offering sufficient collateral may help you secure better terms, especially for non-SBA loans.

Showing lenders that you’re organized, strategic, and financially disciplined may improve your odds of getting funded. A financial advisor specializing in healthcare may help you refine your projections or suggest other options for strengthening your financial position. If you have little to no credit history or high student loan debt, consider seeking a cosigner with strong personal financials.

Managing cash flow in your first year.

The first 12 months for a medical startup are often the most financially challenging. Even a well-run practice that appears profitable on paper can feel the pinch when faced with delayed insurance reimbursements, unexpected expenses, and slower-than-expected patient volume.

When used strategically, medical startup financing can help cover operating costs and working capital needs. Set aside enough funding to cover three to six months of fixed expenses and don’t skimp on marketing during this critical time. Remember that patient acquisition takes time, and cutting back on your visibility may extend the time it takes to start turning a profit.

Evaluating Return on Investment (ROI)

Think of your medical practice loan as an investment rather than a cost. Taking this approach may help create long-term, sustainable profitability.  

To measure its return, start by comparing the cost of your loan to projected revenue growth. Then, estimate how long it will take to break even. Don’t forget to consider intangible returns such as improved patient access, operational stability, or stronger brand trust.

Avoid these startup financing mistakes.

Many new medical entrepreneurs are so focused on getting approved for a loan, they get tripped up by other financial and strategic errors. As you prepare for your launch, be aware of these common pitfalls:

• Underestimating startup costs: Build a contingency fund (approximately 20-30% of total estimated costs) into your financing request.
• Taking on too much debt without a repayment plan: Borrow no more than what you can comfortably pay back based on conservative financial projections.
• Neglecting marketing or patient acquisition costs: Allocate sufficient funds to digital marketing, local outreach, and referral networking. This is critical for growing a patient base, especially in your first year.‍
• Overinvesting in non-essential equipment at launch: In your first year, avoid investing in high-end office furniture, specialty equipment, or other items that aren’t strictly required for quality patient care.

To create a solid financial foundation, focus on strategic, phased spending that’s aligned with patient growth.

Lendio simplifies medical practice financing.

Starting a new medical practice requires strategic planning and the right financial partner. Lendio simplifies the funding process, connecting healthcare professionals with 75+ lenders and loans designed specifically for medical startup companies.

Compare loan options side-by-side, explore offers aligned with your medical specialty, and find the medical practice loan that’s right for your needs with one simple application.

Opening a new clinic, buying diagnostic tools, or hiring additional staff can easily cost six figures. But healthcare businesses have a significant advantage. Since many medical practices have consistent demand and predictable reimbursement models, lenders often view them as lower-risk borrowers.

A small business loan designed for medical professionals may offer more favorable terms, longer repayment periods, and funding amounts that align with your growth goals.

When to consider a healthcare business loan.

A healthcare business loan might be the right move if you’re planning for growth or need to stabilize cash flow. Common scenarios include:

• Expanding or relocating your medical office: Buying real estate or financing major buildouts or extensive renovations.
• Purchasing medical equipment: Financing revenue-generating assets such as surgical robots, MRI machines, dental chairs, ultrasound systems, or advanced diagnostic tools.
• Updating systems and technology: Modernizing patient management software, Electronic Health Record (EHR) systems, or specialized billing platforms.
• Managing temporary cash flow disruptions: Covering gaps in working capital, particularly those caused by seasonal slowdowns or delayed insurance reimbursements.
• Supporting acquisitions or mergers: Purchasing another practice, merging with partners, or covering transition costs.

While a healthcare business loan can be a financial safety net, many forward-thinking medical professionals use it as a proactive tool to fuel growth. When used strategically, the funds may help improve efficiency, expand patient capacity, and make your practice more competitive.

Loan options for medical professionals.

Medical professionals typically have access to several types of small business loans. The right option for your needs depends on several factors, including how quickly you need funding, what you need it for, and how much time you need to repay it.  Here are some of the most common medical financing structures.

A reputable lending marketplace, like Lendio, can help you compare healthcare loan options side-by-side and connect you with lenders who understand the cash flow patterns of medical practices.

How to qualify for medical office financing.

A healthcare business may already have a small edge when it comes to getting a small business loan, but your practice still needs to meet specific requirements. When evaluating applications for a medical practice loan, lenders typically look for:

• Strong credit score and financial history: Lenders may check both your personal and business credit scores to verify that you have a solid history of managing debt responsibly.
• Reliable income or contracts: Steady patient volume or stable contracts with major insurers help to prove your practice generates consistent income.
• Business plan and projections: Newer practices may need to provide a detailed business plan with conservative revenue and expense projections.
• Financial statements: Established practices typically must provide current financial statements to prove profitability.‍
• Industry experience and professional licensing: Licenses, certifications, and time in the field help demonstrate your practice’s long-term viability.

Quick Tip: Having well-documented patient volume data and clear expense tracking may strengthen your application, particularly if you’re applying during a period of growth or transition.

Smart borrowing strategies.

The right strategic decisions can turn a medical practice loan into an investment tool that supports your long-term growth. Use these tips to help ensure your loan strengthens your practice without creating unnecessary financial pressure.

Borrow based on need.

Start with a clear estimate of how much you’ll need to achieve your goal. It’s reasonable to include a small buffer for unexpected costs, but if the lender offers significantly more than planned, think twice. Taking on extra debt may lead to higher monthly payments and unnecessary interest charges.

Match loan terms to asset lifespans.

Make sure you’re not paying for an asset beyond its useful lifetime. Secure shorter-term financing, such as a line of credit, for consumables or short-term working capital. Reserve longer-term financing for assets that match or exceed the repayment period, such as real estate or major equipment.

Maintain a strong cash reserve.

Even if your medical practice has reliable income, unexpected expenses or insurance delays could create a gap in cash flow. Before taking on a small business loan, you might consider setting aside three to six months of cash reserves. This can help create the flexibility to manage loan payments during lean times without dipping into funds needed for your daily operations.

Understand your loans repayment terms.

Carefully read the details before signing a loan agreement. Make sure you understand the interest structure, payment frequency, and whether it’s subject to prepayment penalties.

Maximizing returns for medical practice loans.

The best investments start with a clear plan. To get the most value from your financing, focus on improvements that directly improve your patient care, capacity, or efficiency. This ensures your financing is spent towards business improvements that positively impact revenue.

Then, continually measure outcomes by tracking metrics such as appointment volume, billing turnaround times, or administrative costs. Some financing, like medical equipment loans, may bring in more revenue right away. For other loans, it might take longer to start seeing a return on your investment.

Once you start experiencing ROI, consider reinvesting early gains into additional marketing or service expansion. These types of thoughtful, disciplined moves may help strengthen your practice’s overall financial resilience.

Tax and accounting considerations.

A medical practice loan may offer tax advantages. Interest payments are often deductible as business expenses. Equipment purchases may qualify for Section 179 deductions, allowing you to reduce taxable income quickly after making capital investments. You may also be able to depreciate renovation and buildout costs over time. To capture all potential tax benefits, consult with a healthcare-focused CPA who is experienced in medical practice accounting.

Lendio helps medical practices find the right loan.

Launching or growing a medical practice often means taking on six- or seven-figure expenses. Lendio simplifies the search for financing by connecting doctors, dentists, and other healthcare entrepreneurs with a network of more than 75 lenders specializing in business and medical financing.

Apply today to compare offers side-by-side and find a medical practice loan that fits your needs.

Launching a startup can be an exciting yet unpredictable challenge. Expenses often pile up before your first sale or invoice payment. Even a solid business plan can run into cash flow gaps that stall growth or make it tough to cover day-to-day costs. 

That’s where a startup business line of credit can help. This flexible financing tool gives you on-demand working capital when you need it most. But like any business funding tool, it also comes with benefits and drawbacks. 

Before you apply, it’s important to understand how a business line of credit for startups works, what lenders look for, and how its pros and cons stack up against other funding options.

How business lines of credit work for startups.

A typical business line of credit is a revolving form of financing, similar to a business credit card (though often with higher credit limits and different repayment terms). Instead of receiving a lump sum upfront as you would with a term loan, you qualify for a credit limit and only borrow what you need, when you need it. You pay interest solely on the funds you draw, not the full credit limit. And as you repay, your available credit resets. The cycle repeats throughout the draw period.

For example, if your startup secures a $50,000 revolving credit line and you draw $10,000 for a project, you’ll only pay interest on that $10,000 until you repay the balance. Once you pay back the money you borrowed, the full $50,000 limit becomes available to use again.

This revolving structure gives startups breathing room between pay cycles, new projects, or product launches. For many founders, that flexibility makes business credit lines a preferred financing alternative to long-term debt.(Note: Some lenders also offer fixed lines of credit. This financing option lets you borrow once and repay without the ability to draw again.)

Startup eligibility factors.

Qualifying for a business line of credit depends on each lender’s eligibility criteria. Banks tend to prefer established companies. Online lenders often work with newer businesses that demonstrate repayment ability.

• Time in business: Traditional lenders, such as Wells Fargo or American Express, may prefer to work with borrowers that have one to two years in business. However, online lenders may accept newer startups (at least six months of operating history) that can show steady deposits or strong financial projections. Within the Lendio Marketplace, we partner with multiple lenders who offer lines of credit to businesses from brand new startups, to those with 6 months - 1 year in business. 
• Revenue and cash flow: Consistent monthly revenue demonstrates an ability to repay the money your business borrows. Requirements vary, but startups with at least $8,000 in monthly revenue often have better approval odds.
• Personal and business credit scores: Both your business credit and personal credit matter. If your company is new, strong personal credit may help offset limited business credit history and help you qualify for better rates.
• Collateral or personal guarantee: Some lenders may ask for collateral, like business equipment or inventory, if you’re applying for a secured business line of credit. If collateral isn’t an option, a personal guarantee might also boost approval odds or help you secure lower interest rates.‍
• Financial statements and projections: Lenders may review financial statements (e.g., bank statements, profit-and-loss reports, cash flow forecasts, etc.) when you apply for a startup credit line. These documents can help show that your business has a plan to manage and repay the money it borrows.

Meeting lender requirements doesn’t guarantee approval for financing, but it may put your company in a better position. If your business is too new to qualify with a bank, Lendio’s marketplace includes lenders that specialize in startup-friendly business financing.

Pros of a business line of credit for startups.

A business line of credit can be a valuable resource when you’re building a company from the ground up. Below are some of the top advantages for startups. 

Flexible funding for fluctuating cash flow

Most startups haven’t had a chance to establish predictable income yet. You might make a big sale one month and barely break even the next. Although this situation can be stressful, it’s part of the growth process. A business line of credit for startups can help you manage that inconsistency.  

You might use a line of credit to cover inventory purchases before a busy season, fund marketing campaigns, or handle payroll while waiting for invoices to clear. That flexibility is why many small business owners prefer a revolving credit line over a traditional business loan.

No lump-sum debt commitment.

Traditional loans provide a fixed amount of money you have to repay with interest, whether you use the full balance or not. With a line of credit, you borrow only what you need, when you need it.

That means you’re not paying interest on unused money or stuck with debt you don’t need right away. This arrangement can help startups keep financing costs lower while still having access to capital for future needs. As a result, startups can reduce the risks of overborrowing and overspending.

Opportunity to build business credit.

An often overlooked perk of business lines of credit is their ability to help you build business credit. Lenders often report payment activity on credit lines to the business credit bureaus (like Experian, Equifax, and Dun & Bradstreet). Over time, paying on time and keeping your credit utilization low could improve your business credit score—possibly opening doors to better financing options later.

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A business credit line could be a fast, easy way for your startup to begin separating personal and business credit. Remember, keeping personal and business finances separate is essential for your company’s long-term stability.

Quick access to working capital.

Many business loans take days or weeks to fund. But some online lenders can approve and fund a business line of credit within a few days or less. And once you open a business credit line, you’ll have the ability to access funds as needed during your draw period (up to the credit limit on your account).Fast access to cash means you can act quickly when unexpected costs come up, like broken equipment or a time-sensitive investment opportunity. For new business owners juggling uncertainty, having access to instant working capital can be a major stress relief.

Cons of a business line of credit.

While the benefits of a business credit line are appealing for startups, founders should also consider the limitations of this type of financing before applying. 

Cost factors: rates, fees, and potential for overspending.

Business lines of credit typically feature variable interest rates, meaning that the APR you pay fluctuates based on market conditions. While this arrangement can work in your favor when interest rates drop, it also means that rates (and your payments) could increase unexpectedly.

On top of interest, lenders may charge:

• Annual fees
• Origination fees
• Draw fees (for each withdrawal)
• Late payment fees

It’s important to read the fine print before you sign any agreement. You should always calculate the total cost of borrowing upfront.

Because funds are so easy to assess, overspending is another risk to be aware of with business credit lines. As a startup, it’s important to be aware of this fact and treat your business line of credit like a financial tool, not extra cash.

Qualification barriers for startups.

New startups with limited credit history or inconsistent revenue may struggle to qualify for a business line of credit. Other startups might receive smaller credit limits or higher rates. Many lenders prefer borrowers to have at least six months of business history and a solid credit score before offering favorable financing terms.You might offset qualification challenges with collateral or a personal guarantee, but those options carry added risk. If your business can’t repay its debt, you could be personally responsible.

Short-term nature compared to other funding sources.

A line of credit is designed for short-term needs, not large-scale projects. So, if your startup needs funding for long-term investments (e.g., real estate, large equipment, etc.), a term loan or SBA loan might make more sense. 

Lender can reduce credit limit.

Another drawback to consider is the fact that lenders can reduce or freeze the credit limit on a business line of credit. If your business experiences financial setbacks or your credit score declines, you might experience this scenario. That’s why it’s important to maintain a strong financial foundation and diversify your funding sources.

Business line of credit vs. other startup financing options

Even if a business line of credit seems like a good fit, it’s smart to consider and compare other financing solutions. The right funding source for your business depends on your goals, timeline, and risk tolerance.

When a line of credit makes sense for startups

A business line of credit could be a good choice if your startup:

• Needs help managing cash flow gaps or seasonal slowdowns. 
• Wants flexibility to handle recurring or short-term expenses. 
• Plans to borrow small amounts of money and repay debt quickly. 
• Prefers to avoid long-term debt.
  

Consider the following scenarios. An Ecommerce startup might use a line of credit to stock up on inventory ahead of a holiday rush and repay the balance after sales post. Likewise, a new consulting firm might draw from its credit line to cover payroll while it waits for client invoices to clear. In both cases, access to revolving capital keeps business operations running smoothly without the burden of fixed-term debt.

Startup financing alternatives.

If a business line of credit doesn’t seem right for your startup, there are other ways to borrow. Below are more startup business loans that might work for your company instead.

1. Term loans

A business term loan provides a lump sum you repay over a fixed schedule. It’s a strong choice for long-term investments like expanding operations, purchasing equipment, or hiring staff. Payments stay consistent throughout the life of the loan, making budgeting easier.

2. SBA loans

The U.S. Small Business Administration (SBA) partially guarantees SBA loans. There’s less risk involved for the lender and borrowers receive improved access to capital. SBA loans typically feature longer repayment terms and competitive interest rates. These benefits often make https://www.lendio.com/blog/sba-loan-startup (provided applicants have steady revenue and detailed business plans to satisfy SBA lender requirements). 

3. Business credit cards

A business credit card could also work for new business owners who want a financing option to cover everyday expenses and small purchases. While credit limits are sometimes lower than business lines of credit, business credit cards may also offer rewards and help build credit. Just be mindful of higher interest rates if you carry a balance.

4. Equipment financing

Equipment financing can help you purchase machinery, tools, vehicles, or electronics while preserving cash flow. The equipment you finance serves as collateral for the loan. Repay the money you borrow in fixed monthly payments (plus interest) over a fixed term. 

5. Invoice financing

Another funding option that may work for certain startups is invoice financing. With this type of financing, you essentially sell your business’ outstanding invoices to secure working capital now. Terms vary, but you may be able to borrow up to 80% of your accounts receivables. 

Is a business line of credit right for your startup?

Whether or not a business line of credit is right for your startup depends on your goals, risk tolerance, and how you plan to use the funds. When you manage a credit line responsibly, it has the potential to help your new business maintain stability, cover short-term expenses, and build business credit. 

However, a business credit line isn’t ideal for every startup. If your funding needs are large, long-term, or growth-oriented, you might benefit from pairing a line of credit with another financing option (like a term loan or SBA loan). Explore the best startup lines of credit in the Lendio marketplace and apply today.

As a small business owner, you often have the difficult job of balancing opportunities with obligations. And if you use a business line of credit to help cover short-term expenses, manage seasonal slowdowns, or support growth, you know just how important maintaining a flexible business financing source can be. 

However, there may come a time when you need a change. Although your business may benefit from keeping an open credit line over an extended time, the original interest rate, fees, terms, or credit limit might not always be the best fit for your company’s needs. That’s where refinancing comes into play. 

When you refinance a business line of credit, it may be possible to lower borrowing costs, improve cash flow, and access additional working capital for new business opportunities. Yet before you refinance, it’s important to understand the process, including potential benefits and common pitfalls, to decide whether it’s the right move for your business.

Can you refinance a business line of credit?

It is possible to refinance a business line of credit, but not all borrowers will automatically qualify. Refinancing a credit line simply means taking out new financing, like a new business line of credit or even a business loan, and using it to pay off your existing debt. In general, the goal is to find a new financing solution that offers better terms than your current credit line, such as a lower interest rate, higher credit limit, or a better repayment structure.

Of course, it’s important to keep in mind that there are caveats when it comes to refinancing a business line of credit. Some lenders may restrict early refinancing or your financing agreement might include a prepayment penalty if you close a credit line before a certain date. You’ll also need to meet a new lender’s qualification requirements, including creditworthiness and annual revenue standards, to qualify. 

On the other hand, if your business credit score, personal credit score, or cash flow has improved since you first opened your line of credit, refinancing might be an easier task. With improvement in these areas (or others), you could be in a stronger position as a borrower to refinance and potentially secure better financing terms.

Is refinancing your business line of credit right for you?

Refinancing a credit line can sometimes be helpful, but it isn’t a one-size-fits-all decision. Before you make a switch, it’s wise to evaluate your current financing situation, business goals, and eligibility.

When refinancing makes sense.

Refinancing a business line of credit could be a smart move if: 

• Interest rates have dropped. 
• Your credit score has improved.
• You’re seeking a longer draw period or better repayment terms.
• You need access to more capital to support business growth or new projects.
• You want to consolidate multiple credit lines or business debt into a single account.

When refinancing might not help.

It may not be the right time to refinance a business line of credit if: 

• Your credit utilization ratio is high.
• Your credit score has declined. 
• Cash flow for your business is unpredictable. 
• Prepayment penalties may apply (and outweigh potential savings) if you refinance early.

Benefits and drawbacks of refinancing a business line of credit.

There are also pros and cons to consider before you refinance a business credit line. See the chart below for side-by-side comparisons you can use during the decision-making process.

Understanding risks and limitations.

Every financing decision involves trade-offs. For example, while a lower interest rate might reduce your monthly payment, a renewed (and therefore) longer overall repayment term could increase total interest costs over time. Likewise, switching lenders might cause a dip in your average age of credit history, potentially triggering a decrease in your credit score.

Before you move forward, calculate these variables. Then, make sure the projected savings from refinancing your credit line is the right strategy to support your long-term business goals.

How to prepare for refinancing: Key steps and requirements.

If you’re considering a business credit line refinance, preparation is key. Lenders will review your company’s financial health, repayment history, and risk profile before approving a refinance or any other type of new business financing. So, if you take time to strengthen your business’ financial position and creditworthiness before you apply, it may improve your approval odds and make your overall refinancing process smoother.

Below are details lenders typically review when you apply to refinance a business line of credit.

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• Business credit score: Lenders assess your credit profile to evaluate your ability to manage business debt responsibly. A higher credit score could unlock lower interest rates and better borrowing terms. 
• Annual revenue: Your company’s gross revenue helps lenders determine your repayment capacity. Lenders want assurance you can manage new business debt payments comfortably. 
• Cash flow: Consistent cash flow indicates stability and demonstrates an ability to meet financial obligations like debt payments, payroll, and operating expenses.
• Collateral: If you apply for a secured business line of credit or a secured business loan, you’ll need to provide assets to back the loan (e.g., real estate, equipment, or receivables). Unsecured credit lines don’t require collateral.‍
• Time in business: Some lenders prefer businesses to have at least one or two years of operational history. However, companies with six months or more in business may be eligible for a startup business line of credit.

After reviewing these factors, take the time to address possible weak points. For example, improving your credit or increasing your working capital might put you in a better position for approval.

Navigating the application process for a refinance.

Once you’re ready to move forward, it’s also helpful to understand what to expect when you apply for a refinance. The process can vary slightly from one lender to another, but here’s a general idea of what you might experience.

1. Review your current loan agreement.

Before applying with another lender, review your existing loan terms. Take time to understand fees, rate structures, and prepayment penalties in your current financing agreement. These details can help you make informed decisions when you evaluate new financing offers. 

2. Assess your financial health.

Check your business credit, personal credit, and recent financial statements. Pay down debt balances (especially business credit card balances) whenever possible. Most of all, pay on time to protect your credit score.

3.  Determine your refinancing goals.

Identify your top priorities for refinancing, like lowering your interest rate, consolidating debt, or increasing your credit limit. Clear financial goals make it easier to sort through offers and choose the best financing solution for your business. 

4. Gather key documentation.

Most lenders require you to provide financial statements, tax returns, and bank statements when you apply for a new credit line or other types of business financing. So, it’s wise to prepare these documents in advance to help speed up the application and underwriting process.

5. Compare lenders and offers.

Request financing quotes from multiple lenders, including online lenders, banks, and SBA loan programs (depending on your borrowing needs). Once you receive quotes, compare interest rates, repayment terms, and fees carefully to find the best fit for your company. 

6. Submit your refinance application.

After you select the best credit line or business loan for your needs, complete your new lender’s application with accurate details and supporting documents. If the lender asks for any additional information, be sure to respond promptly to avoid potential delays.

7. Review approval terms.

Once a lender approves your application, read through the final loan agreement carefully. Confirm the new interest rate, fees, repayment term, and any collateral requirements before signing. 

8. Close and receive funds disbursement.

After closing, your lender pays off the existing credit line or disburses funds so you can do so. If you’re opening a new credit line, be sure to activate your new account and confirm access. With any type of credit, be sure to make your new payments according to the terms of your financing agreement to avoid problems and (hopefully) continue building positive business credit history for the future.

Maximizing benefits and avoiding pitfalls post-refinance.

After refinancing, use your new business line of credit strategically. If you’ve secured a lower interest rate or reduced fees, you can use the savings to reinvest in business growth—perhaps through equipment purchases, operational expansion, or improved cash flow management.

It’s also important to keep your credit utilization ratio low and make all monthly payments on time to maintain a healthy business credit score. Consider setting up automatic payments to avoid missed due dates that could affect future financing opportunities.

Finally, avoid the temptation to take on unnecessary new loans or additional debt. A refinance has the potential to optimize your company’s finances. But it’s essential to manage the refinance process with discipline and a clear growth plan to avoid potential setbacks.

Next steps.

Refinancing a business line of credit can be a smart move, as long as you’re doing it for the right reasons and you manage the process carefully. By securing lower interest rates, better terms, or a higher credit limit, you can improve cash flow and reduce borrowing costs. And either of these scenarios could give your business more flexibility to grow.

Before you commit to refinance a business line of credit, however, it’s essential to evaluate your full financial picture. You also want to compare multiple business financing options. With a little preparation and the right lender, refinancing a business line of credit could transform your business financing strategy and better position your company for long-term success.

A strong business credit profile can open doors to better financing, lower interest rates, and higher credit limits. Yet many small business owners don’t realize they can use a business line of credit to help establish or strengthen their company’s credit history. 

A business line of credit provides flexible access to funds for short-term expenses and can also play a key role in showing lenders that your company manages credit responsibly. Of course, it’s important to use your business line of credit wisely—only borrowing what you can afford and making consistent, on-time payments. If you maintain these good habits, you can use your credit line to steadily improve your business credit score over time. The following guide explains how business credit works. Learn how a line of credit can fit into your credit-building goals and the best ways to boost your company’s credit profile over time.

Understanding business credit and lines of credit.

Before you use a line of credit to build your company’s credit profile, it’s important to understand two key details: how business credit works and how a line of credit functions. Many small business owners focus on personal credit when they apply for financing, especially during the startup phase. In fact, a recent survey from the Federal Reserve found that 86% of small employer firms use personal credit to obtain financing.

Yet lenders often evaluate business credit as well when you seek certain types of capital. Working to establish good credit for your business can protect your personal credit and open the door to more funding opportunities for your company.

What is business credit?

Business credit is data that others can use to measure how reliably your company handles its debt and financial obligations. Lenders, suppliers, insurers, and even potential partners may review your business credit profile to perform risk assessments before extending financing or terms to your company. 

Unlike personal credit, business credit has a direct connection to your company’s name and Employer Identification Number (EIN). Some of the most common business credit scores come from developers like Dun & Bradstreet, Experian Business, and Equifax Business.

Business credit scores often weigh factors such as payment history, length of credit history, company size, years in business, and credit utilization. Yet before your business can build a credit score, it must establish credit accounts (often called tradelines) in the company’s name.

A healthy business credit score may help your company:

• Qualify for lower borrowing costs and better insurance premiums. 
• Access higher credit limits to support growth.
• Receive more favorable payment terms from vendors and suppliers.

How a business line of credit works.

A business line of credit is typically a revolving credit account, similar to a business credit card. Your lender approves you for a credit limit, and you draw the amount of money you need to cover cash flow gaps, inventory purchases, unexpected repairs, or other expenses. As your business repays the cash it borrows, the funds become available again to reuse throughout the draw period on your account.

Key features of business credit lines include:

• Revolving access: Borrow, repay, and reuse your credit line as needed.
• Variable interest: Line of credit interest rates often track market benchmarks, like the Prime Rate or the Secured Overnight Financing Rate (SOFR).‍
• Flexible use: Use to cover short-term expenses, seasonal costs, or unexpected repairs.

Why responsible use matters.

Good borrowing habits (like consistently paying your credit line on time), can demonstrate to lenders that your company manages credit responsibly. These behaviors influence your business credit scores and may help you qualify for better rates and terms in the future. When you use it strategically, a business credit line not only can meet your working capital needs, but may also become a stepping stone toward future opportunities.

Steps to building business credit with a line of credit.

Using a business line of credit strategically can strengthen your company’s financial foundation over time. But your results depend on several factors, including how you prepare before you apply and how you manage the account once it’s open. Follow the steps below to give your business the best chance of qualifying for a credit line and using your new account as an effective credit-building tool.

Step 1: Prepare to apply and strengthen your eligibility.

Before you apply for a business line of credit, make sure your business is ready. Lenders typically review your company’s legal status, finances, and credit history before approving new financing applications. Preparing in advance could improve your chances of approval and show lenders that you operate professionally. Key tasks to prepare for your application:

• Register your business legally. Make sure to register your company as an LLC, corporation, or other legal entity with your state so it can build credit in its own name.
• Apply for an Employer Identification Number. Obtaining an EIN from the IRS lets lenders and business credit bureaus track your company’s financial activity separately from your personal finances. 
• Open a business bank account. Maintaining a separate business bank account helps you keep personal and business finances separate. ‍
• Organize financial documents. Gather essential documents like financial statements, recent tax returns, and cash flow reports for upcoming lender applications.

Step 2: Apply for a business line of credit.

Shop around for lenders that offer credit lines suited to your company’s credit profile, size, and borrowing needs. When you compare financing offers, pay attention to details such as: 

• APR 
• Fees (annual, draw, and maintenance)
• Credit limits
• Repayment flexibility
• Qualification requirements (e.g., minimum credit score, time in business, annual revenue, etc.)

Once you choose the credit line that works best for your business, submit a complete application with accurate documentation. Some lenders may require a personal guarantee or collateral if you’re applying for a secured business line of credit. These requirements might be more common if your business is new or has limited credit history.

Tip: Ask lenders if they report to business credit as part of their program. Many lenders do, but some do not. The majority of lenders who offer lines of credit in the Lendio Marketplace report to Experian, Equifax, or Dun & Bradstreet, which can help you build your business credit history!

Step 3: Use the line of credit responsibly.

Treat your business line of credit as a strategic tool rather than an open checkbook. Make a habit of borrowing only what you need for short-term expenses that support business growth. It’s also important to track each draw and manage spending to avoid overutilization. Using a high percentage of your credit limit could increase your credit utilization ratio and might damage your credit score until you pay down the balance on your credit line. When it comes to credit utilization, lower is better.

Step 4: Make on-time, consistent payments.

Your payment history carries the most weight when you’re building business credit. Pay at least the minimum amount due each month. Consistently paying on time (or even early) can help your credit score and save you money on interest charges. If possible, set up automatic payments to reduce the risk of missing a due date. When cash flow allows, making extra payments could lower your debt faster and improve your credit utilization ratio as well.

Before you apply, it helps to get an idea of what to expect when it comes to line of credit payments. Use our business line of credit calculator to get an idea of what monthly payments, interest, and terms could look like!

Optimizing impact on business credit score.

Next, aim to optimize how your credit line is impacting your business credit score. In other words, find out how to make every draw and payment count—not just from a financial point of view, but from a credit-building perspective, too.

Below are a few helpful strategies, business credit score factors, and pitfalls to understand.

Key credit score factors.

Different credit scoring models consider different data when calculating your business credit score. With your PAYDEX® Score, for example, past payment performance determines the score your business earns on a scale of 1 and 100. Other business scoring models may also consider a wider range of details. While business scoring models differ, the following factors commonly carry weight:

By understanding the credit score factors above and working to manage your credit line according to these details, you put yourself in a better position to earn and maintain good business credit over time.

Pitfalls to avoid when using a line of credit.

It’s also important to avoid common mistakes when you open a business line of credit, such as the following.

• Maxing out your credit line: High utilization could hurt your credit score, even if you pay on time. 
• Late payments: Any delinquencies (especially missed payments) could cause significant credit score damage. 
• Neglecting credit reporting: If your lender or vendor doesn’t report your account to the business credit reporting agencies, your positive payment history won’t count. Look for lenders that share data with one or more of the business credit bureaus. 
• Frequent hard credit inquiries: Applying for too many credit lines in a short period could damage your credit score. So, choose your preferred new account before filling out any financing applications.‍
• Closing your account too early: This decision could cause you to lose the benefit of an active, longer credit history (depending on the scoring model).

Bottom line.

A business line of credit has the potential to serve as both a flexible funding tool and a credit-building asset. So, prepare well, choose the right lender, borrow responsibly, and stay disciplined with payments to set your business up for the best chance of success. If you follow this path, you have a better chance of strengthening your company’s financial foundation and improving its credit profile at the same time.

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Healthcare professionals face high startup costs in the form of office space, equipment, staff, insurance, and more. In 2023, typical startup costs for a small medical practice ranged from $100,000 to $500,000.

But while traditional financing used to be the way to go, SBA loans may be the better option. They offer the flexibility and funds needed to launch, expand, or stabilize medical practices.

Here’s how SBA loans can help with clinic startup financing for doctors, dentists, and other medical professionals.

SBA loans in healthcare: The basics

SBA loans are designed to help small businesses, including private clinics and dentists, with their financing needs. The U.S. Small Business Administration (SBA) guarantees between 50% and 90% of these loans, so lenders are often more willing to work with newer medical practices.

These loans typically have lower rates, longer terms, and greater flexibility in funds usage than traditional financing. These are the most common SBA loans for medical practices.

SBA 7(a)

The SBA 7(a) loan is the SBA’s most versatile financing solution for small businesses. Standard 7(a) loans range from $350,001 to $5 million. Funds can be used for practice acquisition, medical equipment, short- and long-term working capital, and debt refinancing.

These SBA loans have flexible repayment terms—10 years for general use, 25 years for real estate. This makes them a solid option for medical practitioners with ongoing financing needs or plans for future expansion.

Two other loan programs worth considering are:

• 7(a) Small Loans—Loans are for $350,000 or less. Collateral may be required for loans above $50,000.
• 7(a) Express Loans—These are revolving lines of credit that last up to 10 years and cap out at $500,000. They're especially useful for immediate needs, like payroll and equipment repair.

SBA 504

SBA 504 loans are geared toward the purchase of major fixed assets, such as real estate or large medical equipment. Funds can also be used to improve existing facilities or land, as well as consolidate or refinance qualified debt. They can't be used for inventory or working capital.

These loans come with 10- or 25-year repayment terms and typically cap out at $5.5 million.

SBA Microloans

SBA microloans cap out at $50,000, but typically have less stringent requirements. Medical professionals may apply for a microloan through a qualified nonprofit, community-based organization.

These loans are particularly useful in clinic startup financing because of their flexibility. They can be used for medical equipment, inventory, supplies, minor renovations, and working capital. They’re not meant for debt repayment or real estate.

Key ways medical professionals use SBA loans.

Whether you’re a dentist or other medical professional, here’s how SBA loans could help your business.

Advantages of SBA loans for clinics and dentists.

SBA loans can be crucial to launching and scaling your business, or even making strategic acquisitions. While it’s important to choose the right program, SBA loans offer many advantages to dentists and other medical professionals, including:

• Lower interest rates compared to conventional business financing
• 10- to 25-year repayment periods
• Ability to finance both big-ticket items and ongoing operations
• Builds long-term financial stability for medical practices
• Partial government guarantee means less strict financing requirements

Considerations before applying for an SBA loan.

Consider the following before applying for an SBA loan for your medical practice:

• Documentation demands—You’ll typically need tax returns, cash flow statements, other financial statements, and a clear business plan
• Approval timelines—It may take longer to secure funds (five to 10 business days for SBA 7(a) loans) compared to other financing
• SBA guarantee fees—Borrowers may have to pay an upfront fee when taking out an SBA loan (fees are a percentage of the of the guaranteed portion of the loan)

Dental and medical practices face unique demands that other businesses don’t. For example, insurance claims can take time and lead to cash flow delays. Be prepared to demonstrate steady patient demand and insurance reimbursement flow.

Eligibility checklist.

Any form of clinic startup financing, including SBA loans, have their requirements. While every loan program and lender operates a little differently, these are the big ones:

• 650+ personal credit score (165+ SBSS score)
• At least two years in business (or strong startup plan for new practices)
• Proof of sufficient revenue for loan repayment
• For-profit business located in the U.S.
• Proof of licenses, credentials, and regulatory compliance
• Clear loan purpose (like equipment financing, expansion, or debt refinance)
• Down payment or collateral (in some cases)
• Proof of business equity
• Guarantor or co-signer (helps those with a lower credit score or less time in business)

Ultimately, SBA loans can be key to sustainable growth for private clinics and dental practices. These loans allow medical professionals to launch a startup, expand their services, or even merge with an existing practice—all while managing costs effectively and responsibly.

Are you a healthcare professional thinking about using an SBA loan in your practice? Find funding through Lendio’s marketplace today.

Trucking and logistics businesses are the backbone of the U.S. economy. Demand for these services is high, but growth isn’t always easy.

From buying new trucks to upgrading critical technology, expansion often requires large upfront investments. With the cost of fuel, fleet maintenance, and payroll keeping margins thin, growth can feel nearly impossible without reliable access to capital. An SBA loan may make it easier to scale without draining the cash you need for day-to-day operations.

What are SBA loans?

SBA loans are government-backed loans designed to support small businesses. They’re issued through banks, credit unions, and other approved lenders and partially guaranteed by the U.S. Small Business Administration. This guarantee lowers risk for lenders, which allows them to offer better terms for borrowers. Compared to traditional loans, SBA loans often have lower interest rates, longer repayment periods, and more lenient qualification requirements.

Here are some of the most common SBA loans for trucking and logistics companies.

SBA 7(a) loan

The SBA 7(a) loan is the most commonly used SBA program and is also the most versatile. It can be used for a wide range of business needs, including:

• Commercial truck financing
• Covering day-to-day operations
• Refinancing existing debts
• The cost of adding routes or expanding into new regions

Loan amounts go up to $5 million, with a repayment period of up to 10 years for most uses.

SBA 504 loan

The SBA 504 loan is designed for financing long-term assets, primarily real estate and large equipment. Trucking and logistics companies may use this loan for:

• Purchasing terminals, distribution centers, garages, or other commercial properties
• Making major fleet upgrades
• Purchasing warehouse equipment
• Major facility improvements

504 loans are structured as a partnership between a traditional lender and a Certified Development Company (CDC), which is a nonprofit organization approved by the SBA to support local economic development. The borrower typically makes a 10% down payment, the CDC covers 40%, and the lender finances the remaining 50%. Repayment periods can stretch up to 25 years, and interest rates are typically fixed.

SBA microloan

An SBA microloan is available for amounts up to $50,000, making it more appropriate for smaller funding needs. It’s often used by startups or growing businesses that are not yet able to qualify for larger loans. These funds can be used for expenses such as:

• Equipment repairs
• Safety upgrades
• Insurance costs
• Marketing expenses
• Working capital

Microloans are issued by nonprofit lenders. Terms vary by lender, but repayment terms often stretch up to six years. While the maximum loan amount is smaller, it’s often easier to qualify, making this more accessible than traditional loans.

Smart ways trucking companies use SBA loans to grow.

Due to the longer terms and lower interest rates, many companies use SBA loans to cover ongoing operational needs, rather than simply bridging a cash flow gap. These loans can also help business owners make strategic decisions and invest with greater confidence.

Here are some of the most effective ways transportation companies use SBA loans:

• Fleet expansion: Buying or leasing new trucks to keep up with demand
• Maintenance and repairs: Covering the cost of repairs, upgrades, and replacement parts to keep your fleet operational and compliant
• Fuel costs: Providing the working capital needed to manage spikes in fuel prices.
• Technology upgrades: Investing in GPS systems, electronic logging devices (ELDs), route optimization software, or other logistics platforms
• Staffing needs: Covering the cost of hiring and onboarding new drivers, dispatchers, and back-office support, and keeping up with ongoing payroll obligations

Using SBA loans for both short-term operations and long-term expansion can help companies grow without sacrificing stability.

Benefits of SBA loans for logistics businesses.

SBA loans are one of the most accessible forms of logistics business funding, with terms that often align with the financial demands of running a trucking company. Here are a few of the key advantages.

Lower interest rates.

SBA loans are typically offered at lower rates than conventional loans. Since trucking and logistics companies often need larger loans, the savings can add up quickly.

Lower repayment terms.

It’s common for SBA loans to offer repayment terms of up to 10 years for equipment and working capital, and up to 25 years for real estate. This can make payments more affordable, allowing companies to invest in long-term growth without straining the operations budget.

Flexible use of funds.

While some conventional loans restrict the use of funds, SBA loans are designed for use across multiple parts of a business. For example, one loan could cover the cost of financing semi-trucks, meeting payroll obligations, and investing in compliance technology. This flexibility makes SBA loans especially practical for logistics companies that may have shifting priorities.

Positive impact on credit history.

SBA loans are often more accessible than traditional loans, so companies may get approved even with less-than-perfect credit history. Once the loan is in place, making consistent, on-time payments may help strengthen your business profile. Over time, a stronger credit history may create opportunities for larger financing opportunities or better terms on future loans.

Financial stability in a volatile market.

From fuel to insurance, many of the costs associated with trucking and logistics can fluctuate significantly. SBA loans provide predictable, long-term funding that may help keep business afloat when markets shift. Having financing in place reduces pressure during volatile periods.

How to qualify for an SBA trucking loan.

Getting approved for an SBA loan requires preparation. While each lender has its own criteria, most require the following criteria:

• Credit score: Typically 650 or higher
• Time in business: At least two years, though startups may qualify with a solid plan
• Revenue and cash flow: Ability to prove you can afford loan repayment
• Compliance: A clean record with Department of Transportation (DOT) and industry regulations

You may be able to strengthen the chance of approval by preparing up-to-date financial forecasts, strengthening your business plan, and showing steady demand. Completing an online fundability assessment can help you understand how likely your business is to qualify for financing, and additional steps that may help improve your standing.

Find the right loan for your trucking business.

Lendio’s marketplace provides access to both SBA lenders and alternative financing options with a single application. Compare your options to find the best fit for your business. For non-SBA products, you may secure funding in as little as 24 hours.