A business line of credit is revolving credit that you can draw from whenever you need extra cash. You can tackle challenges, afford growth opportunities, and, most importantly, position yourself one step ahead of the competition. Basically, it’s a safety net that ensures your company can always have cash on hand for emergencies and opportunities. Here are a few of the many benefits of a business line of credit:

  1. Avoid having to dip into cash reserves in order to cover unexpected expenses or take advantage of unexpected opportunities.
  2. Enjoy more flexible payment terms with your suppliers, which can help improve your cash flow situation.
  3. Improve your company’s credit rating, making it easier to obtain financing in the future.
  4. You may be able to negotiate better terms with suppliers once they know you have a business line of credit in place, as they know you’ll have the liquidity to establish a consistent relationship.

Overall, having a business line of credit gives you and your company greater financial flexibility and security, which can pay off handsomely in the long run. Make sure to shop around and compare different offers before deciding on a provider, though, as terms and conditions can vary significantly from one lender to another.

Comparing lenders and their programs takes time and effort—something that not many entrepreneurs can afford to give as they operate the day-to-day of their businesses. Rather than take your focus away from what matters most, you can streamline your search for a business line of credit with National Business Capital, the leading FinTech marketplace.

Our 75+ lender marketplace is a time-saving machine for business owners. You might have to wait weeks or months with individual lenders, but when you team up with our expert Business Finance Advisors, you can receive your funds in hours or days, expediting your growth and promptly reaching your full potential.

Business financing can be complicated, but it gets a lot easier with some solid information behind you. Here’s our complete list of business line of credit requirements:

Business Line of Credit Requirements

A business line of credit is a great way to get access to funds for your business. But how do you know if you’re eligible, and what are the requirements?

Here are a few of the standard requirements:

Time in Business – At least one year

Annual Revenue – $120,000 minimum

Credit Score – 600+ FICO score

First, let’s examine the eligibility requirements. In order to qualify for a business line of credit, your business must be in operation for at least one year, generate a minimum of $120,000 in annual revenue, and have a 600+ credit score.

You’ll also need to provide some basic information about your business, including your business name, contact information, tax ID number, and your business’s financial information. These statements will help give the lender you’re speaking with a better understanding of your business and its financial health. In most cases, you offer this information through your formal application, which should be secure to prevent any unauthorized access to your sensitive, personal information.

Once you’ve gathered all of the necessary information, you can apply for a business line of credit online or by speaking with the bank you do business with. However, many entrepreneurs are finding it increasingly difficult to reach an approval with their banks, especially if they’re in “growth mode.”

Alternative lenders have made it easier for more businesses to reach an approval, but applying to these institutions one by one takes more time than you’d think. You need to physically fill out the applications, send over your documentation, then wait for a decision, all of which can take days to weeks at a time.

If you’re frustrated with how long the business financing process is taking, we understand and are here to help. With one application, you can apply with more than 75 lenders at once, and our Business Finance Advisors are there to help you problem-solve throughout—give us a call today to get started!

If you have any questions about business lines of credit or the eligibility requirements, please don’t hesitate to reach out to our award-winning team. We’re here to help you grow your business, outpace your competition, and achieve success.

How to Apply for a Business Line of Credit

A line of credit is a great way to access the funding you need to grow your business, but how do you go about applying for one? Here are a few things you’ll need to do:

1. Check Your Business Credit Score

This will give you an idea of whether you’re likely to be approved for a business line of credit. If your credit score is below average, you might want to consider proactively strengthening your credit before starting the process. That is, of course, if you have the time.

2. Gather Financial Statements

You’ll need to provide information on your business’s revenue, expenses, and assets. Make sure to have your business bank statements, credit score information, and other relevant financial documentation ready and available to ensure you don’t waste time.

3. Prepare a Business Plan

Your business plan will give the lender a snapshot of your organization. They use this information to gain a better understanding of your business’s goals and, more importantly, how you plan to use the line of credit in your operations. As long as your plan is sound, and you intend to use the borrowed funds for a business purpose, you likely won’t run into any issues with this requirement.

4. Find a Lender

There are many options out there, so don’t feel that you need to settle on the first approval you receive. Shop around, compare rates, and find terms that meet your specific circumstances.

5. Submit Your Application

Once you’ve found a lender you’re comfortable with, it’s time to fill out the application and submit it for approval. This is where step 2 becomes important. If you’re applying to multiple lenders, having the necessary documentation close by can help you speed up the process considerably.

Applying for a business line of credit can seem like a daunting task, but if you’re prepared and know what to expect, it can be a relatively straightforward process. If you’re finding it difficult to get through one or more of these steps, our team is only a phone call away.

What Can You Use a Business Line of Credit For, and How Does It Work?

A business line of credit is a flexible financing option that entrepreneurs use for a variety of purposes. Unlike a term loan, which must be repaid in full by a certain date, a line of credit gives businesses the ability to borrow and repay funds as needed, up to the available credit limit. The increased flexibility can be helpful when unexpected expenses arise, or you encounter an opportunity to grow. Here are a few ways you can use a business line of credit to cultivate sustainable growth:

  • Cover payroll expenses
  • Stock up on extra inventory for a busy season
  • Expand your current location or move to a new one
  • Launch a new marketing initiative
  • Purchase necessary equipment
  • Hire new employees
  • Take advantage of outsourced resources, like virtual assistants or copywriting services

One major benefit of business lines of credit is that you only pay interest on the amount you draw—not your total credit line. This means you won’t have to worry about paying an excessive amount of interest for using your line on more minor business challenges. Still, you’ll have to be careful about how much you’re using your financing.

Business lines of credit are typically secured by collateral, such as business equipment or real estate, but this isn’t the case for every lender. Some lenders may not require it at all, whereas others may only require it for businesses with less than favorable financials. Many entrepreneurs tend to avoid collateral offerings like the plague, as they don’t want to risk losing a critically important asset in their business. However, it can be worthwhile if you’re having trouble reaching an approval otherwise. As long as you stay on top of your payments, you can maintain ownership of your assets and secure the funds you need to grow simultaneously.

How to Repay Your Business Line of Credit

Most business lines of credit are revolving, meaning that the term renews whenever you’ve paid off the existing balance. This benefit makes this financing option very attractive to entrepreneurs who are worried about deadlines or time restraints, but this means that you’ll have to set your repayment schedule on your own, much like with a traditional credit card.

Here are a few steps to take when trying to determine your specific repayment schedule.

Evaluate Your Financial Situation

First, start by evaluating your current financial situation. What can you realistically afford to pay each month? Make sure to factor in other debts, fixed costs, and anticipated growth expenses. Once you have a good understanding of your cash flow, you can develop a repayment plan that fits your budget.

Strategize Your Repayment

Next, consider how soon you need to start making repayments. If you have the flexibility, it may be beneficial to spread out your payments over a longer period of time. This will lower your monthly payments, making it easier to meet your other financial obligations. On the other hand, if you need to repay the borrowed amount quickly for one reason or another, you may want to consider making larger payments each month.

Some lenders require you to hold a zero balance for a certain period of time over the course of your financing. You’ll have to plan around your terms, and if there’s something like a zero-balance clause, make sure to speak with your lender about how they expect you to comply with their contract restrictions.

Keep In Contact With Your Lender

Finally, stay in communication with your lender. If you run into any problems or anticipate any changes in your financial situation, let them know right away. By working together, you can ensure that you stay on track with your repayment plan and avoid any potential pitfalls.

Follow these tips, and you’ll be on your way to repaying your business line of credit in no time.


What Are the Terms of a Business Line of Credit?

Business line of credit terms can vary, but they’ll typically involve making monthly payments until you’ve paid off the borrowed amount. In other words, these financing options often have revolving terms, and you only pay interest on the amount you draw.

How Do I Qualify for a Business Line of Credit?

To qualify for a business line of credit, you will typically need to have at least a year in business, a 600+ FICO score, and a minimum of $120,000 in annual revenue. Collateral may also be required, but this requirement depends on the lender you’re doing business with and your business’s financial information.

What Are the Benefits of a Business Line of Credit?

A business line of credit can provide flexible financing for businesses that need access to cash on an ongoing basis, which can be a helpful way to manage cash flow or cover unexpected expenses. You only pay interest on the amount you draw, and the revolving term allows you to reuse the financing once you’ve repaid, unlike term loan options.

How Long Does It Take To Get a Business Line of Credit?

The time it takes to secure a business line of credit depends on the lender you’re dealing with. Typically, banks and credit unions have longer application and underwriting processes than alternative lenders, making the latter a better option for anyone who needs fast financing. For example, it could take weeks or months to secure a line of credit from a bank, whereas it might only take a day with an alternative lender. If you’re looking to streamline your search for business lines of credit, team up with the experts at National, and let our team do the heavy lifting for you.