$1,000 – $500,000
1-2 Year Maturity
As soon as 1-2 Weeks
As low as 8-24%
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.
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.
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 |
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Less strict application requirements |
More strict application requirements |
|
Lower interest rates |
Higher interest rates |
| Higher funding amount |
Lower amount |
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.
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.
There are multiple benefits to a line of credit that make it ideal for businesses.
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?
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.
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.
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.
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.
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.
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California loans made pursuant to the California Financing Law, Division 9 (commencing with Section 22000) of the Finance Code. All such loans made through Lendio Partners, LLC, a wholly-owned subsidiary of Lendio, Inc. and a licensed finance lender/broker, California Financing Law License No. 60DBO-44694.
