Business Line of Credit

A business line of credit is very similar to a credit card in that you can use money, pay a little, use a little, and pay a little and so on. This is a revolving credit that allows you to use money when needed and only requires payments once you start using the money. There are also no specifications for how the money can be used within your business. Credit line funds can be used for inventory, cash flow, or whatever your business needs at a particular point in time to keep up with ongoing operating costs.

Features

Maximum Loan Amount

$5,000 to $1 million

Loan Term

3 months to 5 years

Interest Rates

Starting at 6%

Speed

As little as 24 hours

FREE EBOOK: BUSINESS LOAN BASICS

How it works

With both secured and unsecured options, business lines of credit are an attractive option to most business owners. Another benefit that this type of financing offers is that once you have been approved and have the line of credit, you do not have to reapply every time you want to use the money. It is a good idea to have applied and been approved for a line of credit before you need it. This will help with short-term needs as your business is growing and working to meet regular operating costs.

The terms of this type of loan can range from a few months to several years, depending on your lender. Interest rates will be dependent on your credit and the length of time your business has been operating as well as collateral you have to offer. The application process is usually simple and can be completed in just a couple of days.

The benefits of a line of credit from a lender over a traditional credit card include lower interest rates, fewer, if any, additional fees, especially for cash advances, and no regular monthly payments. You will only make payments on your line of credit when you use the funds available to you, making this an ideal option for short-term financial needs of your business.

Funds readily available when needed

Pay interest only when funds are drawn

Use for most any business purpose

Helps build or improve credit score

Down payment 20 to 25% for conventional loans; 10 to 20% for SBA 504

Interest rates fluctuate based on credit score

Collateral sometimes required

Updated financials may be requested at time of draw

What it costs

Interest rates range from seven to twenty-five percent on the typical line of credit. The benefit to this type of financing is that you only pay interest on the amount of money you have used. Therefore, if you have a credit line of $50,000 but have only used $10,000 of it, you will only pay interest on that $10,000 and for only as long as you have that amount being used.

Once you have paid back that $10,000 (plus interest), you will no longer have any interest accruing. This also means that you won’t have a set monthly payment. You will only make payments on the money that you use once you use it, again, making this a very attractive loan option to meet your short-term needs.

A loan through the Microloan Program does not have fees but has a much lower cap on the total loan amount. Repayment on SBA loans ranges from 5-25 years depending on the amount and purpose of the loan.

Quick and simple process, from Quote to Funding.

  • Get a Quote

    Enter some basic information to get a free, instant quote (no credit check) or fill out a single, free application
  • Apply

    View quotes, apply for one, some, or all options and receive instant conditional approvals
  • Speak with a Specialist

    Review options, opportunities for growth with a funding specialist and get final verification

Not sure which financing product is best for you?

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