Business Line of Credit
A line of credit for businesses offers access to capital on an as-needed basis, where you only pay interest on what you draw.
Qualifications for a Business Line of Credit?
- 1+ Year in Business
- $500,000+ in Annual Revenue
What Do You Need to Qualify?
- 1+ Year in Business
- $500,000+ in Annual Revenue
What are Business Lines of Credit?
A small business line of credit gives you flexible access to cash on an as-needed basis. This type of financing allows you to draw cash from your total credit limit for any business purpose – and only pay interest on what you use.
With a revolving line of credit, more cash will become available as you pay down your balance. Unlike selling equity, the funds from a business line of credit allow you to maintain business ownership, profits, and full control.
You can also use it to bridge cash flow gaps during seasonal slumps or as a rainy day fund. There are no restrictions on how you can use it – you can use a business line of credit to cover any costs or opportunities you face.
Lowest Rates, Longest Terms, & Highest Amounts:
Line Amount
$100,000 to $10 Million
Revolving
Draw funds on an as-needed basis
Time to Fund
24 to 48 Hours
Business Line of Credit Requirements:
Wondering how to apply for a business line of credit? Well, different lenders have various qualifications, so whether or not you qualify can vary based on where you apply. The benefit of applying through a marketplace is that you can learn your options through a variety of lenders with only one application.
Banks and credit unions typically have more aggressive and demanding qualifications. If your business doesn’t have a spotless financial record, qualifying can be difficult. Even if your application is denied at a bank, you can qualify based on your annual sales at an online lender.
Online lenders are a better option for securing a fast business line of credit. With expedited underwriting processes, you can potentially receive your funds within 24 hours.
Marketplaces like Global Rapid Funding are less demanding, focusing on your business and opportunity over factors like history and credit. Applying and qualifying for a business line of credit can take some effort, but it’s not difficult or time-consuming through our marketplace.
As for documentation, here’s what you’ll need:
- Driver’s license
- Business bank statements (going back at least one year)
- Business credit score
- Financial statements
- Time in business
- Proof of ownership (K1, schedule C, EIN, certificate of corporation, etc.)
- Business tax returns
- Collateral (if secured)
- Cash flow statement
- Business plan
Some lenders require alternate documentation to determine your eligibility, but the above list is the most commonly requested.
What are the Benefits of Business Credit Lines?
A business line of credit can be a powerful tool in your back pocket. The flexibility allows you to draw funds whenever you need them and stay one step ahead of the latest challenge in your business – a priceless opportunity for any entrepreneur. Here are a few of the many benefits of leveraging a business line of credit in your operation:
- Fast access to cash
- Only pay interest on what you draw
- Might not need to offer collateral
- Manage your working capital, short-term projects, and other expenses
- Strengthen your business credit
A business line of credit for new businesses can change the way they grow. With flexible access to capital, you can build out necessary areas of your business without jeopardizing cash flow.
Term loans, SBA loans, and other traditional financing products provide you with a set amount of money that you must repay throughout the term outlined by your lender. If you wind up needing more than you originally anticipated, you’ll have to take out an additional loan on top of your previous financing, which can quickly become difficult to manage.
A business line of credit is a way around this challenge – the structure allows you to draw as much as you need from your total credit line without having to worry about taking out additional financing to afford your growth plans.
Lines of Credit Vs. Small Business Loans:
What’s the difference between a line of credit and a small business loan? Both provide your business with the cash you need to grow, but the way these products are structured is different.
When you apply for a small business loan, you receive the full amount you qualify for in one lump sum deposit. A line of credit, on the other hand, offers more flexibility than most loans and cash advances. Instead, you have the option to draw cash in increments and continue drawing more until you reach your credit limit.
Typically, lines of credit have lower interest rates and closing costs, which can make them more cost-effective. Small business loans are the better choice when you’re taking on a huge project with defined expenses. Lines of credit can be better as a flexible backup to cover unexpected costs or as a backup for your bank account.
Choosing a business line of credit over another financing solution could also help you save money on interest. If you were to secure a term loan to meet your needs, you’d have to pay interest on the total borrowed amount, whereas you only pay on what you use with a business line of credit. Plus, making consistent, timely payments on your credit line will work to strengthen your business credit score, which is a priceless opportunity that all entrepreneurs should take advantage of.
How to get a business line of credit? Check that you meet the necessary requirements, then reach out to the experts at Global Rapid Funding to explore the options you qualify for.
How Can You Use the Funds?
Lines of credit are intended to be flexible financing options custom-tailored to your needs. You can use them to cover expenses that are weighing your business down or pursue exciting new growth opportunities.
There are no restrictions on how you must spend this money – you can put it toward any expenses. Some of the most common ways that businesses utilize this business financing option include:
- Grow Your Business – Ramp up your business and cover the expenses needed to expand hiring, payroll, take on new jobs, and more.
- Operating Costs – Always have cash on hand for rent, utilities, and other costs required to keep your business going on a day-to-day basis.
- Marketing Campaigns – Drum up new business and take on more customers with additional marketing campaigns in the mix.
- Seasonal Slow Periods – Get the capital you need to keep your business moving during seasonal slow periods.
- Inventory or Supplies – Purchase additional inventory or supplies to capitalize on busy periods and new opportunities.
- Payroll – Keep a reservoir of funding to cover the costs of payroll, especially with slow-paying clients.
Access to a line of credit is like having cash on demand. The second you need cash, you can draw from your line of credit and get things moving.
You may also have to provide a personal guarantee, which is standard with most types of business financing, and is similar to a personal guarantee you already have with your credit cards.
How it Works?
You’re only a few clicks away from the capital you need to reach your full potential.
- Apply Securely Within Minutes Move through our streamlined application within minutes and upload your business documents with zero risk.
- Review Your Offers Compare your offers with expert advice from our team and select the best one for your specific circumstances.
- Get Funded With your money in hand, you can take advantage of opportunities and tackle challenges with confidence.
Questions to Ask Before Applying:
You only pay on the amount you draw – not your total credit line. That means that – if you draw $50,000 from your $100,000 credit line – you’re only paying interest on the $50,000.
This structure allows you to keep your line of credit on the side line for when you need it without worrying about unnecessary interest.
If your lender reports to a business credit bureau, then timely and consistent payments will work toward strengthening your credit score. Otherwise, your timely repayment will build “credibility” and “creditworthiness” with your lender, which can help you secure better terms in the future.
Interest rates range from 5% to 60%, depending on your business credit score, annual revenue, your time in business, and your willingness/ability to offer collateral.
Collateral, which can be equipment, real estate, or strong receivables, serves as an extra layer of protection against defaults for the lender. By offering an asset to secure your financing, you reduce the level of risk for the lender and, in turn, decrease the interest rate you’ll receive.
Yes, you can secure a business line of credit with a lower FICO score, but you should also be realistic about the terms you qualify for.
Lower FICO scores are seen as “risky” by lenders, so they’ll offer higher interest rates and lower credit limits as a result. You may have to offer collateral, too, as a method of securing the financing.
If your credit score is less than favourable, it’s worthwhile to consider proactively strengthening it before applying for financing. Not everyone has enough time to do this, of course, but even minor increases can yield big savings when it comes to interest rates.
It all depends on your business and goals. For some, the flexibility of a line of credit makes it a better option than a business loan, while others prefer the lump sum format of standard term loans.
There are many businesses that need a specific format of credit. For example, a business seeking to begin a major renovation of multiple storefronts would benefit more from a longer-term, more substantial lump-sum product. If they had leveraged a business line of credit, they’d likely have their entire line drawn, which would significantly raise what they’re paying in interest.
If you’re unsure of which financing option is right for your unique circumstances, our Business Finance Advisors can help. Complete our digital application today to start the process with our team.
Sed ut perspiciatis unde omnis iste natus voluptatem accusantium doloremque laudantium, totam rem aperiam, eaque ipsa quae ab illo inventore veritatis et quasi architecto beatae
Themesflat.
Founder & CEO, Arcade Systems
Sed ut perspiciatis unde omnis iste natus voluptatem accusantium doloremque laudantium, totam rem aperiam, eaque ipsa quae ab illo inventore veritatis et quasi architecto beatae
Themesflat.
Founder & CEO, Arcade Systems