Online Business Line Of Credit (2024)

FAQs

Is it hard to get a line of credit for a business? ›

Is it hard to get a business line of credit? It depends on the lender you choose to work with and the type of line of credit your business needs. Secured lines of credit are typically easier to qualify for, but you will still need to prove a strong annual revenue — and have an asset that can be used as collateral.

A small business line of credit is typically offered as unsecured debt, which means you don't need to put up collateral (assets that the lender can sell if you default on the debt). Many unsecured lines of credit come with a variable interest rate and are available for sums ranging from $10,000 to $250,000.

Regular credit card applications can be approved within minutes, while home equity lines of credit typically take 2 to 6 weeks. Business lines of credit may require a few weeks to a few months due to collateral requirements and extensive documentation.

To land one, you'll need to present a credit score in the upper-good range — 700 or more — accompanied by a history of being punctual about paying debts. Similar to a personal loan or a credit card, an unsecured personal line of credit gets bank approval based on an applicant's ability to repay the debt.

Access to funding: First and foremost, good business credit makes it easier to secure loans, lines of credit, and other types of funding at favorable terms. Lenders are more likely to extend credit to businesses with a strong credit history, which means you can more easily access the capital you need.

Some of the easiest loans to get approved for if you have bad credit include payday loans, no-credit-check loans, and pawnshop loans. Personal loans with essentially no approval requirements typically charge the highest interest rates and loan fees.

To be eligible for a business line of credit, applicants must have a minimum personal FICO credit score of at least 660 at the time of application, have been in business for at least one year, have a valid business checking account and have an average monthly revenue of at least $3,000.

A business line of credit doesn't require a down payment and you only pay interest on the funds that are used. A business line of credit sometimes requires collateral but is also a great way to build up a strong financial history and credit score.

It can be used for various purposes, ranging from bridging temporary cash flow gaps to financing project-specific expenses or even as a safety net for unexpected costs. The borrower can withdraw funds as needed, repay them, and then draw again, making it a revolving form of credit.

Business lines of credit tend to have easy qualifications, such as requiring a lower credit score compared to business term loans. Ultimately, it depends on the lender since each lender sets its own qualifications.

What is the minimum credit score for a business account? ›

A business credit score of 80 or personal credit score above 700, along with a reliable source of income, is usually the minimum to secure a business loan. However, some companies don't consider your credit score at all in the underwriting process. These lenders pay more attention to your company's sales and revenue.

While some lenders offer startup business loans with no revenue, profits, cash flow or assets required, you might pay a higher price for such financing. If you can afford to wait until your business is more established with a solid cash flow, you can likely secure more attractive interest rates and repayment terms.