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Lines of Credit

 Traditional loans tend to require a good deal of planning in order to qualify for them. So instead of guiding the business through a tricky time, business owners get caught up in financing minutiae. That is where a line of credit comes into play.

What are lines of credit?

Think of a line of credit like a credit card. They give businesses a specific allotment from which they can draw at any time and for any purpose. The funds offered from a line of credit function as cash. A business draws from a line of credit as needed and then pays it back when they can. Payments made against the borrowed amount restore the line of credit back towards it starting amount. This financing option offers lower APRs than traditional short and long term loans. You might be wary of a line of credit due to a less than ideal credit score. However, lines of credit have flexibility in how you can obtain them. This means that you can obtain a line of credit that suits you best. For example, you may be able to secure a line of credit by using assets as collateral. Lines of credit can even help you improve your credit score by paying back old loans and restabilizing your finances. Use the funding where you need it most and then pay back as you can.

You can choose from a number of kinds of lines of credit to find the one best suited to your needs. Choose between a secured line, unsecured line and non-revolving line. A preferable option for businesses with low credit scores, secured lines mean that you put assets up as collateral. Creditors tend to trust these loans since they can collect the asset in the event that the obligee fails to make payments. On the flipside, certain businesses may qualify for an unsecured line of credit. This means that they do not have to put any assets up as collateral in order to obtain financing. In nearly all cases, unsecured lines require a healthy credit score to obtain. Finally, a non-revolving line of credit allows for multiple borrowings. Except in this case payments do not free up more funding and the line closes when all funding is withdrawn.

Even if your business credit score isn’t high, you can still be approved for a line of credit. Secured lines give you the ability to use assets such as real estate and equipment as collateral. This encourages lenders to overlook minor credit problems. You may even be able to build better credit with a LOC. Payments made on time and an increase in borrowing power can reflect positively on credit reports.

SECURED

A secured LOC allows you to offer collateral on the loan. This increases the chances of being approved and lowers the interest rate. Our robust network of lenders will accept a variety of different assets as security.

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UNSECURED

An unsecured LOC is a loan without collateral. These lines can be more difficult to qualify for because they require a strong credit score. See if you qualify by consulting with us today.

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NON-REVOLVING

This form of LOC allows you to borrow from the line multiple times. However, payments into the account only serve to repay the loan, not free up more borrowing room.

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Business Lines of Credit

Have big advantages

  • Help boost your credit score when you make consistent payments
  • Borrow however much you need, when you need it
  • Lower interest rates than traditional loans

FAQs

When to Avoid a Line of Credit?
You should not rely on a line of credit to help you out of all your financial jams, especially in the long run. When expecting long term financing for more than 10 years, look for a permanent loan instead.
What Interest Rates are Attached to a Line of Credit?
Interest rates vary depending on numerous factors, including the lender and the credit score of the borrower. They typically range from 1.25 percent all the way to 18 percent or more. Take with a loan broker to get you in touch with a lender who can offer you the most competitive interest rate.
How do I apply for a Line of Credit?

You’ll need to prepare for a credit check, show your accounts receivable, and proof of your time in business. These are general requirements, but a good lender will provide a checklist before you apply. Let us connect you with our network’s flexible lending professionals. 

What Financing Fits You?

It only takes a few minutes to find out exactly what your options are.

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