Business Line Of Credit

The safety net you need, the flexibility you want.


Understanding Business Line Of Credit

LOAN AMOUNT

$1000-$500,000

TIME TO FUND

1-2 Weeks

LOAN TERMS

1-2 Year Maturity

INTEREST RATE

8-24%

Want flexible financing? Then you want a business line of credit.

Think of a line of credit as a financial safety net for your business. It’s there if you need it, but you’re under no obligation to use it. And when you do tap into it, you can use it to cover almost any small business need. Plus, you only pay interest on the funds you use, not the full amount. In other words, it’s as flexible as a double-jointed yoga teacher.

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Benefits Of A Business Credit Line

There are multiple benefits to a line of credit that make it ideal for businesses. 

Only pay interest on the funds you use

One of the coolest things about a business line of credit is that you only pay interest on the funds you use, not the full amount. For example, if you’re approved for a $40,000 business line of credit and you use $20,000 for office upgrades, you’ll just pay interest on that $20,000. This could save you a bundle in interest. Pretty cool, huh?

Multiple use cases

Just like with a credit card, you can use a business credit line for just about anything. It’s good for businesses looking to expand and in need of a little cash to set up a new location, or to buy inventory. It can also be great to have on deck in the event you might need funds unexpectedly. Or it can be good if you expect to experience cash flow issues due to an off-season or something of the like. 

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Minimum Requirements For a Business Line Of Credit.

If your business doesn’t match some of the qualifiers below, it may be more challenging to receive funding from our lending partners.

CREDIT SCORE

560 or higher

ANNUAL REVENUE

at least $50K

TIME IN BUSINESS

6 months or more


Not Qualified Yet? We Can Help

Lendio has the accounting software tools to get your start-up business ready for financing.

Easily track your company’s health and identify any capital shortcomings you may face.
Understand the financial health of your business with reports like profit and loss, balance sheet, tax summary, customer statements, and accounts receivable.
Create personalized invoices and allow your customers to pay by credit card with our free software.

Secured Line Of Credit Vs Unsecured Line Of Credit

When considering a line of credit for businesses, you may find that you have to decide between secured and unsecured lines. Knowing the difference is important to be able to make this decision. 

With a secured line of credit, you’ll have to offer up something as collateral. It can be future credit card sales or an interest in your business. But this can help lower your interest rates on your line of credit. It’s a smaller risk for the lender, making it a better deal for you. 

An unsecured line of credit is one where you haven’t offered collateral. Meaning it’s not guaranteed or backed by anything. This is a bigger risk for the lender and can mean higher rates for you and a lower amount.

Secured Line of Credit

Collateral Required

Less strict application requirements

Lower Interest Rates

Higher Funding Amount

Unsecured Line of Credit

No Collateral Required

More Strict Application Requirements

Higher Interest Rates

Lower Funding Amount

How To Apply For A Business Line Of Credit

Sure, you can go the bank route with a long application process and 75% rejection rate. But if you’re looking for financing in this lifetime, Lendio offers a faster, easier application process.

STEP
1
Fill out the 15-minute online application.

It’s secured with bank-grade encryption and SSL technology, so you know your information is safe.

STEP
2
Receive matches.

We pair you with loan options from our network of 75+ lenders. Our dedicated funding managers can help you weigh the pros and cons of each option.

STEP
3
Get funded.

Once you’re approved, you’ll be able to access your capital in as little as 24 hours.

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Why use Lendio?

$12+ BILLION

funded through us

75+

lenders in our network

300,000+

loans funded

“The Lendio process was amazing”

Sterling Hannemann
Co-Owner of Seven Brothers

“Lendio literally saved my business.”

Chloria Chandler
Owner of Bobbee O’s BBQ

Line Of Credit FAQs

A business line of credit is a financing tool for businesses that allows them access to money as expenses arise. It’s also one of the most flexible forms of financing.  You can use it for buying equipment, hiring staff, increasing inventory, adding a second location, paying invoices, installing a cappuccino machine, and more.

And because a line of credit is revolving, you can use it as many times as you want. As soon as you repay what you’ve used, those funds become available to you again.

Lines of credit are more similar to a business credit card than a business loan because you don’t receive a lump disbursement at once. Instead, you pay for business expenses using the line of credit and repay the financier back for only the funds used.

If you pay using a line of credit, interest accrues on any balance that is not paid down by the end of each statement period. Like a credit card, as you pay down the balance, the amount of credit available to you increases.

Limits on a business line of credit are set by a lender. Lines of credit are typically renewed over time, assuming the borrower’s creditworthiness remains in good standing. Usually, once you agree to a line of credit, it will remain open until you opt to close it.

If you’re interested in getting a line of credit for your business, you can fill out our easy online application and see your options in as little as 15 minutes. You’ll then see the lenders that might provide a line of credit and the other details of what you qualify for. 

A business line of credit is a desirable form of funding for business owners. You can use our line of credit calculator to see how much you might qualify for and what the terms might be based on your business details.

You don’t need collateral for a business line of credit. You could get an unsecured line of credit that does not require collateral. But it could cost you more. With unsecured lines of credit, the interest rates can be higher because lenders are taking a larger risk in lending to you. 

Once you receive approval for a line of credit and agree to the financier’s terms, the mechanics of a business line of credit are pretty easy to understand.

You can use the funds from the line of credit for any business-related expenses—you can even withdraw them as cash to use for business purchases.

If you don’t repay the financier for any funds used within a statement period, your account will accrue interest.

Generally, you don’t want to spend too close to your credit limit for too long—this situation sends a warning to your lender that your business might be struggling.

In some cases, a financier might require you to pay down your total balance and keep your balance at $0 for a period of time. This shows that your business can survive without using credit.

In other situations, especially in a bad economic environment, a financier might require you to pay back a line of credit all at once. Because of this, you shouldn’t make a line of credit the lifeblood of your company.

Interest rates for a business line of credit can range from 8% to 24% as of May 2022. If your credit score is higher, you can usually secure a rate on the lower end of this scale.

Remember, these interest rates only apply to balances that carry over from repayment period to repayment period. You’ll pay the least amount of interest if you can pay down your balance as quickly as possible.

It is common for lines of credit to have annual fees, so read your agreement carefully.

Generally, you don’t want your balance to be too near your credit limit for too long, especially if you work in a riskier industry like restaurants, construction, or seasonal retail.

Research is always your friend when it comes to small business financing. You can use line of credit calculator to understand exactly what a line of credit could provide for your company.

Lines of credit work differently than small business loans. After applying for a line of credit, you could have funds in one to two weeks if you’re approved. You could get up to $500,000 in funding, which you could then pull on when necessary. It’s there if you need the funds, and if you don’t, it’s nice to know you have it just in case. A huge benefit of a business credit line is that you then only pay interest on and have to repay the money you actually use from your line of credit. To repay you would usually make monthly payments on the amount you’ve borrowed. The term for a line of credit is usually one to two years. 

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