Since the funds available with a small business line of credit are typically less than those of a term loan, a line of credit is usually used for more immediate expenses and not for making long-term investments.
Important note: The best business line of credit terms and conditions are made available to those businesses that have higher credit scores, higher monthly revenues, and have been in operation for more time.
Types of Business Line of Credit
Business lines of credit come in two general categories:
1. Revolving business lines of credit - for larger businesses that have strong credit scores; credit limits are generally higher
2. Non-revolving business lines of credit - for smaller businesses that have weaker credit scores; credit limits are generally lower
Business Line of Credit: Quick Facts*
*Note: these figures are the minimum figures across all of our lending partners.
Top 5 Benefits of Business Lines of Credit:
- Use funds as-needed
- Quick application process
- Low credit scores can still qualify
- Funds replenish; no need to reapply
- Young businesses can still qualify
More loan products
Although lines of credit come in a variety of forms, the common trait between them all is the ability for borrowers to use the available funds on an as-needed basis. Flexibility is the main advantage of a small business line of credit, which in turn allows for even very young businesses as well as those with poor credit scores to obtain this form of funding. Business line of credit for new business? No problem!
Pros and Cons of Business Line of Credit
✔ Use the funds on an as-needed basis
✔ Fast and easy application process
✔ Ability to use funds for any purpose
🗙 Penalties for late payments can be costly
🗙 Risk of overspending
🗙 Irresponsible use can harm credit
How Business Lines of Credit Work
Every business has different needs and a different LendingScore™, which means the available types of small business lines of credit will be different from one business to the next.
Line of credit terms can vary from around 3 months to up to 5 years. The pay back schedule will vary also - some lenders will ask for monthly payments, others weekly, bi-weekly or even daily. Businesses can also choose between an unsecured business line of credit and a secured line of credit, the difference being whether or not the business owner has collateral to provide as security. An unsecured line of credit is one of the best financing solutions for young businesses - another way that a business line of credit works for new businesses.
The credit limit and the business line of credit rates will also depend on your LendingScore™ - which reflects several ‘funding factors’ such as your monthly revenue, business financials, credit score, business age and more. A better your LendingScore™ means better terms for your business line of credit.
Bottom line: The terms and conditions of a line of credit depends on a variety of different factors. To find out if you can qualify for a business line of credit and to check your LendingScore™ for free, apply here.
Who can benefit from a small business line of credit?
While businesses of all types will find a line of credit as a useful financing option, some businesses stand to gain more, for example:
✔ Businesses that don’t have assets to use as collateral (unsecured business line of credit)
✔ Businesses that need fast funding
✔ Businesses with low credit scores (300+ FICO score minimum)
✔ Businesses that want a flexible funding solution
✔ Businesses that have operated for as little as 3 months
Credit Score Requirements for a Business Line of Credit
In plain language, the credit score requirement for a business line of credit will vary greatly between different loan providers. At Become we are able to help business owners with credit scores as low as 300 (FICO) to qualify for a business line of credit.
Become goes above-and-beyond to provide business owners with the best possible chance of getting funded. By using advanced algorithms, Become is able to quickly and accurately assess a business’s financial profile. And by partnering up with dozens of the top loan providers in the USA and Australia, Become is able to connect businesses with the lenders that are the optimal match for their profile and needs.
Don’t have a perfect credit score? Don’t worry!
Since dozens of loan providers translates to a wide range of different products and services, Become is able to tailor-fit businesses to the loans that are right for them. This also means that the terms and conditions (as well as business line of credit rates) will differ from lender to lender. Business lines of credit offered by the lenders in the Become network have FICO credit score requirements that can dip as low as 300!
This means that businesses with less-than-impressive credit histories are still capable of obtaining the financing they need (or want!). But don’t forget that businesses with a better credit history will receive the best business line of credit terms since they’re seen as less risky. The bottom line is, the credit limit and term length will come down to the level of risk the lender is willing to take.
See if I qualify
(your credit score won’t be affected!)
How to Apply and Qualify for a Business Line of Credit
Step-by-step guide for applying for a business line of credit:
- Choose your desired loan amount and select ‘Get Loan Offer’
- Fill in the requested information (including time in the industry, revenue, business, etc.)
- Submit your business’s checking account information for analysis
- Wait for offers. You can also review your status by clicking ‘Access Your Loan Application’
- Review offers and select your preferred lender
- Receive the funds to your business checking account
- Review your tailored LendingScore™ dashboard to improve your funding options
- Improve your rates - if your LendingScore™ is insufficient, follow the personalized plan (8-12 weeks to unlock funding)
Don’t think a business line of credit is the right funding solution for you?
More loan products
Do you still have questions and want to speak with one of our representatives? No sweat, we’re here to provide the answers!
USA & Australia