Business line of credit

Business Line of Credit

The safety net you need, the flexibility you want.

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Loan Amount Icon

Loan Amount

$1,000 – $500,000

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Loan Term

1-2 Year Maturity

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Time to Funds

As soon as 1-2 Weeks

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Interest Rate

As low as 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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Business Line of Credit

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What is a business line of credit?

A business line of credit is a financial safety net for your business. 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.

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Secured Line of Credit vs Unsecured Line of Credit: The Difference

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. 

Secured line of credit

Unsecured line of credit

Required some sort of assets as collateral

No collateral

Less strict application requirements

More strict application requirements

Lower interest rates

Higher interest rates

Higher funding amount

Lower amount

 

Secured vs. unsecured line of credit 

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.

What is the funding and repayment process like for a line of credit?

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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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?

Business line of credit best uses

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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Requirements for a Line of Credit

A line of credit for businesses is not the easiest form of funding to get. You’ll want to have a credit score of 560 when applying because most lenders will look for that as a minimum. You’ll also want to have at least six months in business, and a minimum of $50,000 in annual revenue. 

If you’re looking for a secured line of credit, you’ll need to have some collateral to offer too. That might help you get better terms for your line of credit.

Apply for a business line of credit

To apply for a business line of credit, gather your business plan, your business history, your statements showing your annual revenue, and your line of credit application. You can easily fill out our quick online application in just 15 minutes.​​ Apply now to see your options from our marketplace of 75+ lenders.

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How to qualify and apply for a business line of credit.

To get your business line of credit, you’ll typically need to be in business at least 6 months and have $50,000 or more in annual revenue. You’ll also need a credit score of 560 or higher.

Your lender may ask you to make a personal guarantee, which is an agreement that the lender may be able to levy personal assets such as a car, house, or bank account if you default on the line of credit.

Applying is easy: simply fill out our 15-minute application, then compare business line of credit options from 75+ lenders.

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FAQs 

How do I get a credit line for my business?

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. 

Is it difficult to get a business line of credit?

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.

Do you need collateral for a business line of credit?

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. 

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Lendio agent Brett was a pleasure to work with and super helpful in connecting me with the right lender for a business line of credit. This new way of banking with peer-to-peer lending is amazing for small businesses compared to the stringent large banking requirements.

Chris M.

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