When you want to buy inventory, manage cash flow or pay for unexpected expenses, you can consider seeking a business line of credit. This is a form of small-business loan that offers more flexible terms than other typical loans. A person can borrow as they need based on their limits, ranging from $1,000 to $250,000. Since a business line of credit with lower credit limits is typically unsecured, collateral like inventory and real estate are unnecessary.

How Does A Business Line Of Credit Work?

The functionality of a line of credit is similar to a credit card. You can draw the amount of cash you need using a line of credit and repay it later. A line of credit can be used and repaid as long as a person makes timely repayments and doesn’t exceed their credit limit.

The interest is paid on the borrowed portion of the money, and many lenders permit clients to repay the total balance early to save on interest charges.

How to Acquire a Business Line Of Credit

Minimally, a person requires at least six months in business and $25,000 annual revenue to be eligible for a business line of credit. Though not all lenders have a credit score limitation, most borrowers will likely require a score of at least 500 to qualify.

Typically, applying for a business line of credit requires documents such as business and personal tax returns, business financial statements, and bank accounts. Many traditional lenders oblige businesses to have high revenue and many years of history to qualify. Larger credit lines may need collateral, which the lender can withhold if the borrower fails to repay. The SBA credit lines also follow strict requirements.

The lender may issue the business line of credit some days after approval. Generally, banks take longer than online lenders to give a line of credit.

As a businessperson, you need to have a sound financial strategy for your business. A business line of credit can help. For more information on how you can get one, contact us today at 360 Commercial Capital for more details.