What is a Business Line of Credit?
A business line of credit gives you a pool of funds to draw cash from when you need more money to buy inventory, use as working capital, and handle any other business emergency that may arise.
A business line of credit has more flexibility that a regular loan lacks. It can be used to take advantage of unexpected opportunities, deal with payroll as well as other major purchases you may need to make.
Who Qualifies for Business Line of Credit?
Anyone can qualify for business lines of credit as a result of its flexible financing policy. Irrespective of the age of your business, an option that suits you awaits you.
When your business is young and just newly established, you can qualify for short-term lines of credit while with already established businesses you are a good candidate for medium-term lines of credit.
How Do You Apply?
Applying for business lines of credit is easier with online presence as compared to the stress you will be compelled to go through when you visit traditional lending institutions.
To facilitate the business line of credit process, certain stipulations will be required of you. They include:
- A Valid Driver’s License
- Bank Statements
- Balance Sheet
- Business and Personal Tax Returns
- Profit and Loss Statements
- Voided Business Check
- Credit Score
It is easier to gain access to a short-term option than a longer-term option as the later requires intense paperwork.
How does Business Line of Credit work?
When you apply for a business line of credit, the lender gives you access to a pool of fund. The entire fund is not withdrawn at once, but then, you have access to withdraw any amount at any time you need or want and repay with interest.
As long as the money remains with the lender, no sort of payment is made neither do you incur any interest. The business line of credit is similar to your credit card which gives you access to funds when needed.
Usually, there are borrowing limits in business line of credit which you are expected to stay within. As long as you stay within the limits and repay as at when due, you will continually have access to fast cash.
While other lenders may require collateral for you to qualify, your business revenues and credit status are major indices for a successful qualification for business line of credit.
Benefits of Business Line of Credit
A business line of credit is suitable for all business purposes, providing funds to deal with opportunities as well as emergencies when needed. It is capable of providing you fast cash from as low as $10,000 to $1,000,000.
It provides cash for all credit classes be it a poor or perfect credit status with highly competitive interest rates starting from 6% within one working day.
A business line of credit also gives you an excellent way to build your credit score once again as you are able to gradually pay off the loan within a convenient loan duration.
Renewability is another benefit as it enables you to withdraw funds, pay back, and withdraw again thereby saving you time and energy.