Business Line of Credit FAQ
What is a business line of credit?
A business line of credit is a flexible financing solution that provides your small business with access to on-demand capital. It allows you to draw funds as needed, up to an approved credit limit, and only pay interest on the amount borrowed.
How can a business line of credit benefit my company?
A business line of credit can help you:
- Manage cash flow fluctuations by bridging gaps between payables and receivables
- Seize new growth opportunities, such as expanding operations or purchasing inventory
- Access working capital quickly to address unexpected expenses or urgent needs
What can I use a business line of credit for?
Business lines of credit are versatile financing tools that can be used for a wide variety of purposes, including:
- Funding new equipment or facility expansions
- Covering payroll and other operational expenses
- Purchasing inventory to meet seasonal or unexpected demand
- Pursuing new business ventures or market opportunities
How does a business line of credit differ from a term loan?
The key differences between a business line of credit and a term loan are:
- Revolving credit vs. lump sum: A line of credit provides access to funds on an as-needed basis, while a term loan delivers a one-time lump sum.
- Repayment flexibility: With a line of credit, you only pay interest on the amount borrowed and can repay and redraw funds as needed. Term loans have fixed repayment schedules.
- Ongoing availability: A business line of credit remains available for you to access over time, unlike a term loan that is fully disbursed upfront.
Procedural FAQs
How do I apply for a business line of credit?
To apply for a business line of credit, you'll typically need to provide the following:
- Business financial statements (income statement, balance sheet, cash flow)
- Personal financial information for business owners
- Details about your business operations, industry, and growth plans
- Information about any existing business loans or credit facilities
Our team of lending experts will work closely with you to gather the necessary documentation and guide you through the application process.
What are the eligibility requirements for a business line of credit?
Eligibility requirements can vary, but generally include:
- Minimum annual business revenue (typically $100,000 or more)
- Positive cash flow and profitability
- Strong personal and business credit history
- Time in business (typically at least two years)
We evaluate each application holistically to determine the best financing solution for your specific needs and situation.
How long does it take to get approved for a business line of credit?
The approval timeline can vary depending on the complexity of your application and the information provided. In general, you can expect the process to take 1-2 weeks from the time we receive a completed application and all supporting documentation.
Our team will work efficiently to review your application and provide a decision as quickly as possible. We understand the importance of timely access to capital for your business operations and growth.
What are the typical interest rates and fees for a business line of credit?
Interest rates and fees for business lines of credit can vary based on factors such as your creditworthiness, the credit limit, and the specific lender. On average, you can expect:
- Interest rates ranging from 7% to 25% APR
- Annual fees typically between $50 and $150
- Potential origination fees of 1-3% of the credit limit
We are committed to providing competitive rates and transparent terms to support the financial success of your small business.