Consider a business line of credit (LOC) if you require a more flexible option for funding your ongoing business expenses. Our Patriot Express Line of Credit provides members with an unmatched, streamlined process to access capital that you won’t find anywhere else.
A small business LOC is a flexible and fast financing option if you need a quick injection of cash. Many business owners find it somewhere in between a business loan and a business credit card. Similar to a business credit card, a credit line uses revolving credit to let you borrow money. Although a line of credit has a predetermined credit limit, as soon as you pay back your expenses, your full credit limit becomes available to use again.
Lines of credit are useful for large purchases or expenses that cannot go on a credit card, like payroll. They are also useful for businesses that wish to be prepared for unexpected expenses, or business owners who want the flexibility to take only the funding they need at any given time. Lenders may offer an unsecured credit line or a secured credit line, depending on your eligibility.
An unsecured line of credit is offered to an individual or business without them having to put up any collateral. These tend to be riskier for lenders, so borrowers must have a high credit score — typically above 700 — and show a good history of repaying debts on-time. A secured credit line is similar, but collateral is required. In the case of a secured line, if the borrower is not able to pay off the debt then the lender may seize the collateral provided.
With a line of credit, you only pay interest on the amount you draw (and not the entire credit line), making it a flexible option for businesses that may not be ready to commit to a large lump-sum small business loan. For qualified borrowers, a credit line often comes with a larger credit limit than a business credit card. In addition, purchases you make with a line of credit usually have a lower average APR than that of a business credit card.
To apply for a business LOC, you will have to prove your ability to make payments with documentation such as bank statements and tax documents. Your credit score will also often be taken into consideration. These factors will determine your available credit line and APR.
Your application for a credit line might be more heavily scrutinized than your application for a business credit card. So, the best time to apply for a LOC is when your business’s financials are in good shape. Don’t wait to apply for a credit line when you are in the middle of a cash flow emergency! Applying for funding before you need it ensures you’ll be able to do your research, make a funding decision confidently, and get the best business lines of credit rates available.
StreetShares provides the best options for getting the cash you need when you need it most through our collateral-free lending options.
Learn more about other simple collateral-backed funding solutions that enable small and medium-size companies to secure funding quickly and easily.
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