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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.

A business line of credit can be a lifeline for small businesses that need access to flexible working capital. But before you apply for financing or draw your first dollar, you need to understand how interest rates affect your borrowing costs.

Rates on business lines of credit vary widely depending on the lender, your credit profile, and the structure of the credit line itself. Knowing the details that impact these rates can help you compare financing offers with confidence.

The following guide breaks down how lenders set rates on business lines of credit and what interest rate ranges you can expect in 2025. Plus, learn how different types of credit lines compare and key steps you can take to position your business for more competitive borrowing offers.

Understanding business line of credit interest rates.

A business line of credit works much like a revolving business credit card, giving you flexible access to cash on an as-needed basis. You can borrow up to your approved credit limit, repay the debt, and borrow again throughout the draw period (as long as the credit line remains open and in good standing). 

Like credit cards, several details combine to determine how much you pay to borrow money with a business line of credit, including your outstanding balance. However, the primary factor that influences potential borrowing costs is your interest rate.

Interest rates on business lines of credit vary. Lenders consider several factors when evaluating your application—both to determine if you qualify for a business line of credit and to decide how much to charge you. Understanding these details can help you compare financing offers for your business more effectively.

Key components that shape business line of credit interest rates.

1. Base rate: Most lenders use a benchmark rate like the Prime Rate or the Secured Overnight Financing Rate (SOFR) as the starting point for pricing credit lines. 

2. Risk-based markup: Your personal credit scores, business credit scores, revenue, cash flow, time in business, and other factors affect how much margin a lender may add on top of the base rate. The higher the lender believes your borrowing risk to be, the higher the markup.

‍3. Fees: Annual fees, draw fees, inactivity fees, and sometimes even maintenance charges can increase your overall borrowing costs, even when the advertised interest rate looks competitive. That’s why it’s important to review both the APR and the fee schedule.

Types of business lines of credit and their rate structures.

The type of business line of credit you apply for also influences the interest rates lenders may offer you. Understanding these differences can help you select the most affordable (and best suited) financing option for your company.

Why secured vs. unsecured matters.

Lenders view secured lines of credit as less risky because they have collateral to claim if a borrower defaults on their debt. That lower risk for the lender often translates to lower interest rates for the borrower. For example, if your business pledges $50,000 of inventory as collateral, you might qualify for a lower rate on a business line of credit compared to a business seeking the same credit limit without any assets to secure the loan. 

Unsecured lines of credit, on the other hand, shift all risk to the lender. The borrower has no “skin in the game,” although the lender may still require a personal guarantee. Without collateral, the lender will often charge a higher rate to compensate for the additional risk.

Revolving vs. non-revolving credit lines.

A revolving credit line functions much like a business credit card. This financing structure is the most common business line of credit. As you pay down your balance on a revolving line of credit, you free up available credit that you can borrow against again during the draw period on your account. Because the interest rate on these accounts often track a benchmark rate, like the Prime Rate or SOFR, your borrowing costs can rise or fall with market conditions. 

A non-revolving line of credit acts more like a business term loan. Once you draw the funds, you can’t access the credit line again. Instead, if you need more capital for your business, you’ll need to reapply for funding (and likely pay off the money you already borrowed first). Some non-revolving products may feature a fixed rate or an interest-only repayment option while others offer variable interest rates. So, it’s important to pay attention to the financing terms to make sure you understand the cost. These structures can be helpful for one-time large expenses, like seasonal inventory or equipment upgrades.

Comparing business lines of credit rates: Benchmarks and what to expect.

Business owners may shop for a line of credit because they need flexible access to capital. Yet comparing offers without understanding interest rates can lead to higher borrowing costs than expected. In 2025, lenders continue to base most credit line pricing on market benchmarks and their own risk policies. If you know how these pieces fit together, it can help you better predict your own financing costs and potentially negotiate better terms.

Average interest rates and what drives them.

Most lenders tie the interest rates they offer on business lines of credit to a benchmark, such as the Prime Rate or the Secured Overnight Financing Rate (SOFR). Because of this arrangement, when the benchmark rate rises, your borrowing cost increases as well. Likewise, if the benchmark falls, you pay less. That’s the nature of a variable interest rate.For well-qualified borrowers, current rates on business lines of credit often start in the low double digits. Newer businesses or applicants with weaker credit may see APRs climb into the high-20% range. Lenders may adjust the interest rate they offer you after reviewing factors such as:

• Creditworthiness: Lenders reward strong business and personal credit scores. For example, a good FICO® Score (670 or higher) may help you unlock lower APRs.
• Revenue and cash flow: Steady revenue and a dependable cash flow signals to lenders you can repay debts on time and can often bring down your interest rate.
• Loan size and term: Larger credit limits or longer repayment periods add risk for lenders. So, you might face a higher interest rate if you’re looking for either of these features in your line of credit. ‍
• Collateral: If you pledge assets such as inventory or receivables, lenders often offer a lower APR than they would on an unsecured credit line.

Even if two businesses applied to the same lender on the same day, they would each likely receive very different financing offers because of these variables. 

Why line of credit rates vary across lenders.

Another detail that can impact the interest rate you pay on a line of credit is where you apply for financing. Banks, online lenders, and SBA-backed programs each evaluate risk in different ways.

• Banks and credit unions: Traditional financial institutions usually advertise the most competitive starting APRs for established businesses with strong credit and collateral. But these lenders often require extensive documentation and loan processing timelines can be lengthy. 
• Online lenders: If you’re looking for faster funding options or more flexible minimum borrowing criteria, you may want to consider applying for a line of credit from an online lender. However, online lenders may also charge higher APRs to offset the added risk. ‍
• SBA-backed credit lines: Both traditional and online lenders offer SBA lines of credit, like SBA CAPLines, SBA Express Lines of Credit, and other options. SBA interest rates are typically competitive, but paperwork and approval can be time consuming.

It’s wise to compare several lenders to find the best combination of cost, speed, and qualification requirements to fit your business borrowing needs.

Typical rate ranges by business profile.

Here’s what many small businesses can expect to pay in 2025. The following numbers represent typical APR ranges, though individual offers may differ based on the factors above and on current market conditions.

Understanding how lenders set rates and how your business profile affects pricing could save you thousands of dollars over the life of your credit line. When you estimate the payments on a business line of credit, it’s eye opening to discover that even a two-percentage point difference in APR on a $50,000 balance could cost thousands of dollars in extra interest each year. Before you apply, review your credit, cash flow, and collateral to strengthen your borrowing profile.

Assessing offers and choosing the right business line of credit. 

After you understand rate ranges for business lines of credit, it’s wise to compare financing offers beyond just the advertised APR. Look beyond the cost and evaluate other key features like repayment flexibility to make sure the credit line fully supports your business borrowing needs.

Key details to compare

When you review multiple offers, focus on the following core details. 

1. APR and fees: Consider the full cost of borrowing, including APR and all lender fees (annual, draw, maintenance, etc.).
2. Repayment terms: Understand draw period length, repayment schedules, and whether your rate is fixed or variable. 
3. Flexibility: Make sure the credit limit and repayment structure are a good match for your seasonal or ongoing borrowing needs. ‍
4. Qualification criteria: Confirm minimum borrowing requirements including credit score, time in business, financial history, and other relevant risk factors.

Key questions and warning signs to consider.

Before you choose a line of credit for your business, it’s also important to ask lenders key questions to avoid surprises.

• How often do you adjust variable rates, and how will you notify me about rate changes? 
• What happens if I want to renew or increase my credit limit in the future? 
• Do you charge any fees for early repayment or inactivity? 
• Will you charge additional fees if I draw funds frequently or in small amounts? 

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Also, watch for red flags like unclear fee schedules, confusing repayment terms, or high penalty charges for inactivity or early payoff. A reputable lender should provide you with a transparent breakdown of all costs and straightforward answers to your questions. 

Improving your business’s eligibility for better rates.

Lenders reward borrowers who are well prepared, demonstrate creditworthiness, and financial stability. As a result, if you make an effort to strengthen your application before you apply, you may increase your chances of accessing more competitive interest rates.

Steps to improve your borrower profile

1. Improve your credit. Pay down revolving credit card debt, resolve delinquencies, and review your credit reports for errors to improve your credit score.

 2. Organize your finances. Gather key documents such as financial statements, tax returns, balance sheets, and cash flow reports and have them ready for lender review.

‍3. Build relationships with lenders. A history with your bank, credit union, or an existing lender could work in your favor when you apply for new financing. 

‍4. Consider collateral. If you have inventory, receivables, or equipment to pledge, those assets may help you secure a lower interest rate.

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Taking the steps above can demonstrate lower risk to lenders which often translates to better pricing and terms.

Leveraging creditworthiness and financial practices.

Your financial history plays a major role in how lenders assess risk when you apply for financing (whether a business line of credit or other types of business loans). Lenders typically look at your personal and business credit scores, annual revenue trends, and overall debt figures. They also want to see a clear business plan that outlines how you’ll use the credit line and repay it. 

Building a solid relationship with lenders is another long-term strategy that may strengthen your borrowing position—especially for businesses seeking long-term financial relationships. Consider providing regular updates about your financial performance, sharing growth plans, and maintaining open communication to build trust over time. When you demonstrate consistent repayment habits and strong financial practices, lenders may respond with better terms and lower rates.

Bottom line.

A business line of credit may help your company manage cash flow, cover seasonal costs, and take advantage of new opportunities. But the interest rate you secure plays an important role in how valuable that financing will be for your company over the long term. If you want to find the best financing available for your business, take the time to compare offers beyond the advertised APR. Review each lender’s full cost structure, repayment terms, and qualification criteria. And if you need to earn better terms, be sure to gather documentation, strengthen your credit profile, or offer collateral before you apply. The work you put in upfront could add up to meaningful savings over time.

If you run a retail or ecommerce business, you're likely familiar with this scenario. Demand is high and customers are ready to purchase, yet your shelves are nearly empty.

Maybe you’re stocking up for the holidays? Or perhaps your ecommerce brand just went viral? Or you want to place a large order with a supplier to secure a better price? The opportunity is there, but your cash is tied up in inventory. While you wait for revenue to come in, you might not have the funds to restock.That’s where inventory financing comes in. Instead of stretching your budget thin and pulling money away from payroll, marketing, or day-to-day operations, a small business inventory loan gives you access to funding backed by the products you’re already selling.

What is inventory financing?

Inventory financing (also known as a product-based business loan) helps you cover the cost of the stock you plan to sell. Instead of requiring property or other assets as security, the loan is tied directly to your inventory.

Put simply, the stock sitting on your shelves or in your warehouse acts as the collateral.

Inventory financing typically comes in two forms:

1. A line of credit gives you flexible access to funds whenever you need them, and you only pay interest on the amount you use.
2. A term loan provides a lump sum up front, which you repay in regular installments over time.

This flexibility makes it easier for businesses with fluctuating demand to match their financing to their sales cycle.

How does an inventory loan work?

Here’s what the process usually looks like:

1. Apply through a lender. On Lendio's lending marketplace, one simple application gives you access to a network of 75+ lenders, including those that specialize in inventory financing.
2. Lender evaluation. The lender reviews your sales history, cash flow, and the value of your inventory to see how much you qualify for (we'll discuss this in more detail below).
3. Funding. If approved, you’ll receive financing tied to the value of your inventory. This could be a revolving line of credit that you draw from as needed, or a lump sum you can put to use right away.
4. Repayment. Like other loans, you’ll make regular payments based on the agreed terms, which include principal and interest.

As the loan is secured by your inventory, the approval process is often faster and less paperwork-heavy than traditional bank financing. In fact, some small businesses have accessed funds in as little as 24 hours, giving them the flexibility to stock up without delay.

When does inventory financing make sense?

There are times when keeping shelves stocked puts real pressure on your cash flow. That’s when inventory financing can be advantageous. Here are a few situations where this might come into play:

• Seasonal businesses preparing for peak demand. Holiday retailers, garden centers, or back-to-school suppliers often need extra stock ahead of a short, busy sales window.
• E-commerce brands growing fast. Online stores that experience a sudden surge in orders can often struggle with uneven cash flow.
• Product-based businesses buying in bulk. Suppliers often offer discounts for large orders, but the upfront cost can be steep.

In cases like these, a small business inventory loan can bridge the gap, helping you stock up and capitalize on growth opportunities with working capital when you need it.

Still, there are trade-offs. Extra stock can park thousands of dollars on a shelf and push up storage costs. Plus, if sales are slow, you’ll be marking items down just to get rid of them, and because inventory loans include interest as well as fees, they can end up pricier than more traditional options. That's why it's imperative to build a repayment plan you can actually stick to.

However, grounding your decisions in sales data ensures that forecasts translate into practical reorder points, repayment plans align with expected sell-through, and financing focuses on items that turn quickly, thereby maintaining a healthy cash flow.

Benefits of a small business inventory loan.

With that base covered, an inventory loan can work to your advantage.

• Stay in stock when demand spikes. Reliable funding helps you replenish your shelves before rush periods, resulting in fewer stockouts and, therefore, happier customers.
• Keep cash free for what keeps you moving. Financing the inventory itself leaves working capital available for payroll, advertising spend, shipping, customer support, and other necessary expenses.
• Order earlier and in the right quantities. Access to capital allows you to place larger purchase orders, helping you meet supplier minimums.
• Improve unit economics. Bigger buys and predictable order schedules often qualify for better pricing and payment terms, which can lift gross margin per unit.‍
• Make cash flow steadier. Regular repayments align with expected sell-through, making planning and forecasting simpler and reducing the likelihood of cash crunches.

How to qualify for inventory financing.

Every lender has its own criteria. Most will look for the following, so having these ready can speed up approval:

• Credit and revenue: A solid credit profile, consistent monthly revenue, and positive cash flow will show you can service the debt.
• Sales history: POS reports or invoices that demonstrate inventory turns, seasonality patterns, and reliable sell-through.
• Inventory valuation: SKU-level counts, unit costs, aging and shrink reports, plus a clear description of what you’ll buy.‍
• Supporting documents: Recent bank statements, tax returns, P&L and balance sheet, A/R and A/P aging, purchase orders, and inventory reports.

Smarter inventory financing starts here.

Inventory financing can be a shrewd way to turn demand into revenue without straining day-to-day cash needs. Used in conjunction with clear forecasts, disciplined reorder points, and repayment schedules that align with sell-through, it helps you maintain optimal stock levels.

But choosing the right loan structure matters just as much as timing. That's where Lendio helps. One application opens the door to multiple lender options, allowing you to compare offers and tailor terms to your sales cycle, so you can move forward confidently.

Ready to explore your options? Start your application with Lendio.

When you buy an existing business, you step into a living and breathing operation. There's a customer base that knows the name on the sign, a team that understands the day-to-day, and best of all, revenue already flowing in. It's the head start that many entrepreneurs dream about.

But even with those advantages in place, the cost of the initial purchase can be a massive hurdle. You either need a large amount of cash on hand or a lender who's ready to back the deal, which is where, for many buyers, small business financing becomes part of their story.

One option stands out for its flexibility: The SBA 7(a) loan. These government-backed loans under the 7(a) program make it possible to buy a business with a smaller down payment and longer repayment terms.

But to take full advantage of those benefits, you need to understand how the process works and what lenders are looking for, which is why we've created this guide. We’ll show you how an SBA loan can help you buy a business and why the 7(a) loan in particular is one of the most accessible options available.

Why use an SBA loan for business acquisition?

For first-time buyers, getting a traditional business loan can be an uphill battle. Many lenders want to see evidence that you’ve done this before, with years of experience behind you, strong financials, and collateral to back the loan.

An SBA 7(a) acquisition loan changes that dynamic. The U.S. Small Business Administration guarantees part of the loan, which, in turn, reduces the lender’s risk. This extra security makes lenders more willing to approve financing and offer lower down payments along with more flexible terms.

In many cases, you only need 10% of the purchase price upfront, and repayment terms can extend up to ten years, providing more breathing room during the early months of ownership. Even first-time buyers can qualify if they show experience that relates to the business and can present a plan the lender finds realistic.

If, at this point, you think you could benefit from an SBA 7(a) loan to acquire a business, the next stage is mapping out the steps involved in securing it:

Step One: Choose a business that lenders will love.

What lenders really want is confidence that the business will continue to perform. Signs of that include reliable income, a loyal customer base, and a name that carries some weight in your niche. So, keep those factors in mind as you start evaluating opportunities.

You might come across leads through brokers, platforms like BizBuySell, or referrals from people in your network. However you find them, what matters most is how the business holds up under closer scrutiny.

So, go through at least three years of:

• Tax returns
• Profit and loss statements
• Balance sheets

Go beyond the basics, too. Check for active leases, vendor contracts, licensing documents, and any debts the business might be carrying. These details help you and your lender understand what you’re really signing up for.

As we've already hinted at, lenders will also consider your background. So, it's worth remembering that if you’ve worked in a similar industry, that experience can help you stand out as a qualified buyer.

Step Two: Pin down the true value of the business.

Before the SBA approves your loan, the business needs to be appraised. If the deal is over $250,000 or involves a complete change of ownership, a formal valuation is typically required.

There are a few ways lenders calculate value:

• Seller's discretionary earnings (SDE) × industry multiple: This method is common for small businesses with steady earnings. SDE is a measure of the business’s total financial benefit to the owner, including salary, perks, and net profit. Lenders or appraisers multiply the SDE by an industry-specific number (called a multiple) to estimate the business’s value.
• Asset-based valuation: This focuses on the business’s physical assets. Things like equipment, inventory, furniture, and property. Instead of using the original purchase price, lenders want to know what those assets would sell for today. This method is typically used when a business has a large inventory of tangible assets and less predictable income, such as a manufacturer or retail shop.
• Third-party appraisal: Sometimes, the lender will need a third-party appraisal, especially for larger deals. At this stage, a certified appraiser will step in to give an objective view of the business's value. That number matters a lot since SBA loans can’t go above the appraised value.

Step Three: Structure the deal.

Once you have that figure and know a lender is on board, it’s time to decide how the deal will come together financially.

Most deals include:

• An SBA loan covering 70-90% of the purchase price
• Buyer equity of at least 10% (this shows your commitment and is required under SBA rules)
• Seller financing for the remaining balance (either as a loan or a standby debt)

Step Four: Prepare your SBA loan application.

By this stage, you’ll already have reviewed the business’s tax returns and financial statements with your lender in mind. Now it’s time to assemble the complete application package and apply for an SBA loan. This includes proof of the purchase agreement, such as a letter of intent or a signed contract, along with your business plan, two to three years of financial projections, your personal credit report, resume, and a list of assets and liabilities.

Step Five: Close the deal.

Once your loan is in motion, expect the process to take anywhere from 30-90 days.

A straightforward purchase can wrap up fairly quickly, whereas more complex deals involving multiple stakeholders often take longer if the lender needs additional information along the way.

The process typically moves through stages such as underwriting and credit analysis, any required site visits from the lender or SBA, a review of your documentation with follow-up questions about how the business will operate, and finally, loan approval and disbursement.

Once approved, funds are then transferred directly to the seller, and you’ll assume operational control on the agreed-upon closing date.

The smart path to business ownership.

Buying an existing business is a big step, but with the right funding, it’s one you can take confidently. At Lendio, we connect business buyers with SBA-approved lenders every day. Check your SBA 7(a) loan eligibility now and take the first step toward owning the business you’ve been looking for.

A business line of credit can be one of the most flexible financing tools available for small businesses. Unlike a term loan that provides a lump sum upfront, a credit line works more like a business credit card. You draw funds on an as-needed basis, repay the money you borrow, and only pay interest on the outstanding balance. That flexibility can provide a valuable safety net for cash flow gaps, unexpected expenses, or opportunities to expand your business.

Yet before a lender approves you for a business line of credit, you’ll need to meet certain eligibility requirements. Lenders carefully review your creditworthiness, time in business, financial history, and other risk factors to determine if you qualify. Understanding these requirements upfront can save you time, improve your approval odds, and help you secure more favorable borrowing rates and repayment terms.The following guide covers everything you need to know about how to qualify for a business line of credit. You’ll learn the key factors lenders review when you apply for a credit line, pitfalls to avoid, and the steps involved in the application process. We’ll also cover alternative financing options to consider if a business line isn’t the right fit for your company.

Key eligibility requirements for a business line of credit

When you apply for a business line of credit, a lender will look at several factors to assess your risk as a borrower. Specific eligibility requirements vary, but the following table provides an overview of the minimum requirements you typically need to satisfy when you apply for this type of financing.

Now, let’s dive deeper into the individual qualification details lenders often consider when you apply for a business line of credit.

Minimum credit score, revenue, and time in business

Your credit score is a major factor lenders rely on to determine eligibility for business lines of credit. Many online lenders require a minimum personal FICO® Score of 600 for an unsecured business line of credit. Though with certain business credit lines and business loans, the lender may consider your business credit score as well.

Credit standards tend to be tighter with traditional lenders, and minimum credit score requirements could be as high as a 700 FICO® Score. But for secured credit lines, lenders may approve borrowers with slightly lower scores.

Annual revenue also plays a critical role in your ability to access business funding. Every lender has different minimum borrowing criteria. But small businesses that generate $100,000 or more in annual revenue typically have a better chance of qualifying for revolving credit lines. 

Additionally, the longer your business has been in operation, the stronger its borrowing profile. Some lenders prefer financing applicants to have at least one to two years of operational history. Yet startups with 6 months or more in business may still qualify for a new credit line depending on the lender—especially if the applicant has good credit, collateral, solid cash flow, or other compensating factors.

Collateral and personal guarantees: What lenders expect

It’s possible to access an unsecured line of credit for your business, especially if you work with an online lender. Yet many traditional lenders prefer borrowers to put up some sort of collateral to back their business credit lines or loans. So, it’s no surprise that the Federal Reserve’s 2023 Small Business Credit Survey found that 55% of business financing applicants cited “no collateral requirement” as a main reason they chose an online lender over a bank.

Remember, with a secured line of credit you pledge business assets to back your revolving financing such as accounts receivable, equipment, or inventory as collateral. If collateral isn’t available, lenders often require a personal guarantee—a legal promise that you’ll repay the debt personally if your business cannot. This adds risk for the borrower but can increase your odds of approval.

Documentation requirements for business line of credit

Once you understand the basic eligibility requirements for a business credit line, the next step is preparing your documents. Organized records not only speed up the application process, but can also help you appear more professional to lenders.

Typical documentation for credit line application

Many lenders will request a similar set of documents when you apply for a business line of credit (though online lenders often require less documentation compared to traditional banks). To expedite the process, prepare the following documents in advance.

Having the right documents ready upfront demonstrates strong organizational skills and may increase your chances of approval.

How to apply for a business line of credit

Applying for a business line of credit involves more than simply filling out a form. Here’s a step-by-step guide to simplify the process. 

Step 1: Pre-qualification: Evaluate your position

Before you apply for a business credit line, assess your financial health. Review your credit scores, cash flow, and existing debt obligations. You can request your three personal credit reports (Equifax, TransUnion, and Experian) for free from AnnualCreditReport.com. It’s also possible to request your business credit reports and scores (often for a fee) from business credit reporting agencies like:

• Dun & Bradstreet
• Experian
• Equifax

Reviewing your personal and business credit information can help you understand potential strengths and weaknesses before you submit any financing applications. For example, if your revenue is strong but your credit scores are borderline, consider improving your credit first so you’ll be in a better position to qualify for competitive interest rates and borrowing terms.

Step 2: Compare lenders and key terms

Not all lenders are the same. Traditional banks often offer lower interest rates, but they may have stricter qualification requirements. Online lenders tend to be more flexible and faster with financing approvals, but may charge higher interest rates.

As you compare lenders, weigh factors like:

• Interest rates (APR)
• Credit limit
• Fees (annual fees, draw fees, prepayment penalties, etc.)
• Repayment terms
• Flexibility in drawing and repayment

The Federal Reserve’s 2023 Small Business Credit Survey found that 71% of business financing applicants received at least a partial approval (business lines of credit, loans, or cash advances) from online lenders. But when seeking funding from large banks, approvals dropped to 68%, and credit union approvals fell to 65% during the same period. These figures highlight the importance of shopping around.

Step 3: Submit the application and manage next steps

After you choose a lender, complete the application. Provide accurate financial information and attach all required documents.

Next, most lenders will perform a hard credit inquiry which may have a slight negative impact on your credit score. According to myFICO, the addition of one hard inquiry on your credit report results in a loss of less than five points from most people’s FICO® Scores. And hard credit inquiries only factor into your FICO Score for 12 months.

After you submit your application, you can expect a response. Possibilities include:

• Conditional approval
• Request for more documentation
• Application denial
• Collateral appraisal request (if required)

A final decision often happens within days (or sometimes sooner) with online lenders. With traditional banks and credit unions, it could take weeks to hear back about a decision. If a lender approves you, be sure to review the agreement carefully before you sign the final financing agreement. Pay close attention to interest rates, repayment terms, and whether the credit line is secured or unsecured.

Common pitfalls and how to avoid them

Even strong businesses can face financing denials if they make mistakes during the application process. Below are some common pitfalls to avoid.

What not to do when applying for a business line of credit

• Don’t exaggerate revenue. Lenders will verify the figures on your application and financial statements through tax returns and bank statements.
• Don’t submit incomplete applications. Missing documents could delay approval or result in the outright denial of your funding application.
• Don’t ignore personal credit. Many lenders review both business and personal credit scores when you apply for a business line of credit.‍
• Don’t overapply. Too many applications can trigger multiple hard inquiries, potentially lowering your credit score in the process.

Special considerations and alternatives

Although a business line of credit represents a flexible financing solution, they aren’t the ideal borrowing vehicle for every business. Some businesses may have a more difficult time qualifying for this type of financing and, as a result, may want to consider alternative borrowing solutions.

Who qualifies more easily?

Businesses with at least two years of operations, strong cash flow, and collateral typically have the easiest path to approval for revolving credit lines. However, startups with strong personal credit and solid business plans may still qualify with online lenders.

Pros and cons of alternative financing options

If your business doesn’t meet the standard borrowing criteria for a line of credit or if you want to explore other financing solutions. Here are a few alternatives to consider, along with some basic pros and cons of each.

Alternatives to business lines of credit

• SBA Loans: Backed by the government, SBA loans often feature competitive rates and longer repayment terms but can be harder to qualify for. (SBA Loan Programs)
• Business Credit Cards: Easier to qualify for than credit lines, these work well for smaller, everyday purchases.‍
• Short-Term Loans: Provide quick funding, but often come with higher interest rates.

Pros and cons of alternative financing options

Bottom line

Qualifying for a competitive business line of credit requires research, preparation, and an understanding of what lenders look for in a well-qualified applicant. But if you focus on your credit score, revenue, collateral, and documentation, there’s a good chance you may improve your approval odds.

If you don’t qualify today, don’t get discouraged. Strengthening your credit, improving cash flow, and building operational history is all progress in the right direction for future financing applications. Remember, each step you take improves your business’s financial foundation.

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If you run a construction company, you know how challenging securing the right financing for your business can be. Whether you want to expand your business, purchase equipment, consolidate certain business debts, or supplement your cash flow, an SBA loan could be the solution.

SBA loans offer flexible, affordable funding options to help contractors grow, stay liquid, and compete for larger jobs. From equipment financing to contract management, the right loan program could set you up for long-term success.

Why SBA loans work for construction firms.

SBA loans, like the SBA 7(a) and SBA 504 programs, are ideal for industries with:

• Capital-heavy operations (like vehicles or equipment)
• Project-based cash flow
• Long payment cycles (including delayed or staggered payment timelines)

But unlike traditional commercial construction financing options, SBA loans offer key benefits to smaller contractors, like:

• Lower interest rates (fixed)
• Longer repayment terms (usually 10 to 25 years)
• Lower down payments
• Higher approval odds for newer or growing businesses

Since these loans are partially government-backed, SBA lenders are often more willing to work with contractors—even those with uneven revenue or less time in operations. Because of this, many small businesses rely on these loans to fund their construction, renovation, and refinancing needs.

Top SBA loan types for contractors.

The SBA offers three main loan programs for contractors: SBA 7(a) loans, SBA Express loans, and SBA 504 loans. These are the main benefits of each, and which types of businesses they’re geared toward.

SBA 7(a) loan

SBA 7(a) loans are one of the most flexible options for small businesses. Construction companies can use them for working capital, equipment financing, expansion, debt refinancing, and more. Loan amounts cap out at $5 million and come with long repayment terms—up to 10 years (general use) or 25 years (real estate).

These loans are ideal for contractors with ongoing project needs, plans for future growth, and new acquisitions.

SBA Express loan

SBA Express Loans typically have a faster turnaround time than traditional business financing. However, interest rates may be higher. Loans cap out at $500,000. Collateral isn’t required for loans up to $50,000.

These are geared toward businesses seeking immediate working capital or smaller equipment purchases.

SBA 504 loan

SBA 504 loans are designed for purchasing fixed assets like heavy equipment or machinery, warehouses, or commercial real estate. They may also be used to consolidate or refinance certain business debts.

These loans are structured with 10- to 25-year repayment terms, fixed interest rates, and up to a 10% down payment requirement. The maximum loan amount is $5.5 million (with exceptions).

SBA 504 loans are best for contractors investing in large, long-term assets.

What construction companies can finance with SBA loans.

SBA loans for construction companies are versatile. Business owners can use funds for things like:

• Heavy equipment financing (excavators, backhoes, forklifts, trenchers, etc.)
• Vehicles (work trucks, trailers, fleet vehicles, etc.)
• Office expansion (either leasing or buying warehouses or land)
• Working capital for materials, labor, or insurance while waiting on project payouts
• Hiring new workers or subcontractors before project payments arrive
• Bonding and licensing costs (to meet or maintain business compliance requirements)
• Consolidating or refinancing eligible business debt
• New business acquisition

Check with different SBA lenders—and SBA loan programs—to find the right solution for you.

Overcoming construction industry-specific financing challenges.

Dealing with complex financing challenges as a construction business? Here are some solutions:

• Irregular cash flow—Use SBA funding to bridge gaps between billing milestones
• Delayed payments—Get a line of credit or working capital to meet payroll and vendor obligations
• Equipment depreciation—Spread out costs with fixed-rate SBA loans instead of using up all available cash
• New project acquisition and onboarding—Invest in mobilization before that first payment hits

SBA eligibility requirements for construction businesses.

Business loans for contractors, even loans through the SBA, come with their share of requirements. While every SBA loan program operates a little differently, these are the main SBA loan requirements:

• U.S.-based, for-profit business
• Meet SBA size standards (typically under $39.5 million in annual revenue)
• 2+ years in operation (lenders may work with startups with considerable experience and a strong business plan)
• Minimum personal credit score (usually 650+) and business credit score (usually 165+)
• Proof of ability to repay loan funds (can be shown through historical revenue, cash flow projections, or project pipeline)
• Collateral like commercial real estate, equipment, or accounts receivable (requirements depend on loan size)
• Personal guarantee (typically required for those with 20% business ownership)

SBA loans for construction companies may also have maximum revenue requirements. Specific lenders may have their own fees and other criteria.

How to strengthen your SBA loan application as a contractor.

Even if you don’t have the best credit or most established firm, you could still qualify for a business loan as a contractor. Here are some ways to overcome the odds:

• Show project history through completed projects and success metrics
• Include detailed cash flow projections (accounting for delayed payments and retainage)
• Highlight equipment financing needs and explain how new equipment will increase project capacity or ROI
• Provide lenders with relevant certifications and licenses illustrating business legitimacy and compliance
• Prepare a business plan with clear growth strategy and use of funds

Key considerations before you apply.

Ready to apply for business financing? Do these things first:

• Make sure you meet both the SBA’s and the specific lender’s eligibility requirements
• Consider seller financing for used equipment alongside an SBA loan
• Look for lenders experienced working with construction firms
• Review loan contract terms carefully
• Be prepared to explain slow periods and your ability to cover loan payments during off-seasons

Be sure to apply before you need the funds so you’ll have them when needed.

SBA loans help contractors grow.

As a construction firm, you could leverage an SBA loan to manage contracts, purchase equipment, fund growth, and even refinance certain debts. These loans can provide the reliable, flexible capital your company needs to take on bigger—and better—projects, build a stronger team, and succeed against the competition.

Ready to apply? Find the SBA funding you need with Lendio.