A line of credit is an amount of money provided by a lender, which an individual can spend at will, either by credit or check, provided they pay some amount back each month.
Most lenders will require the possession of an open bank account. Some businesses may be required to prove financial history of two or more years. And lending institutions will consider the small business’s credit score.
What Types of Businesses is it Good For?
As a small business owner it is nice to have access to cash when you need it. A business line of credit is very similar to a business credit card. A line of credit is a good option to offset the “ups and downs” with business. This type of financing is meant to provide a helping hand to a solid business with a proven ability to repay the loan.
What are the Minimum Requirements?
Generally, most small businesses can qualify for a business line of credit if they have a credit score of 560 or higher. You will need to show your tenure in business and provide collateral to back the loan.
How Much Will a Line of Credit Cost? Business Line of Credit Loan Calculator
Line of credit interest rates range from eight to twenty-four percent. The higher your credit score the better your rate will be. A traditional line of credit with a rate as low as prime+ can be obtained with a 680+ credit. If your credit is challenged at the moment then a non-traditional loan can give you a good option with higher rates.