Business Line of Credit
There are many kinds of business financing available on the market today. Most businesses are familiar with the standard Business Term Loan, but the lesser known Business Line of Credit can also be a powerful tool for growing or struggling businesses.
Business Lines of Credit give you access to funds while avoiding many of the inconveniences and costs of other business financing options. The Business Line of Credit is versatile, it can be used to cover emergency expenses when calamity strikes, to fund an unexpected opportunity for growth, or even just used as working capital to fund your daily operations during a slow month or otherwise.
What Is A Business Line Of Credit?
A Business Line of Credit works much like a credit card. Your business is assigned a borrowing limit with terms and an interest rate. You can borrow from this line of credit whenever you need, up to the limit. There is a minimum payment you will be required to make on any balance you carry, along with interest. You only pay for what you borrow, and when your balance is paid in full, your borrowing limit is usually restored. This is called a revolving line of credit, and it means your business will have continuous access to the borrowing limit without having to reapply.
Businesses with steady access to credit are able to capitalize on spur of the moment opportunities that come their way, and pay for any surprise expenses without destabilizing their cashflow.
- Rates: Starting at 8%
- Funding Amount: $1K – $250K
- Funding Term: Up to 18 Months
- Speed: 1 – 3 Business Days
How Do Business Lines Of Credit Work?
After you draw money from your Business Line of Credit, minimum payments will be due on a weekly or monthly basis, until you repay what you borrowed. Your line of credit will have a repayment term for when the full balance is due. If your balance is paid on time, your credit line is usually replenished.
You can always pay off your balance early to save money on interest, and so long as you remain in good standing, your Business Line of Credit will be accessible to you indefinitely.
Allenby offers Business Lines of Credit with borrowing limits of up to $250,000, term lengths of up to 18 months, and interest rates starting at 8%. There may be an additional fee between 1%-3% every time you draw from the credit line.
Collateral is not usually required to secure a Business Line of Credit, unless you are applying for a very large credit limit.
What Are The Benefits Of A Business Line Of Credit?
The flexible nature of Business Lines of Credit means you only pay interest on funds that you draw. You can pay back the money you spend as soon as works best for you, providing it is within the set term and you keep up with your minimum payments. With other types of funding, like Business Term Loans, you begin making fixed payments with interest as soon as you receive the money, regardless of how much of it you spend.
Business Lines of Credit are also flexible when it comes to their many uses. Once you are approved for a Business Line of Credit, you will have access to funds whenever you need, no matter what the reason. This means that unexpected problems down the road can easily be dealt with, and business opportunities that spring up along the way will not pass you by. For example if you own a retail business, and one of your products is flying off the shelves after a particularly successful marketing initiative, a Business Line of Credit will allow you to restock your inventory immediately, so you do not miss out on any sales. Later on in the year, you might experience a sudden drop in your sales, in which case you could use your Business Line of Credit to fill in the gaps where your cash flow falls short, until sales pick up again. A Business Line of Credit will protect you from unforeseen pitfalls and prepare you for unexpected opportunities.
If you apply for a Business Line of Credit and you are approved, the moment your business needs access to capital you are covered. There is no need to waste time shopping around for business financing and filling out lengthy applications. Your Business Line of Credit is already available to you for any scenario your business might encounter.
Business Lines of Credit have much larger borrowing limits than credit cards usually do, and your interest rate will not increase when you approach your borrowing limit like it does with most credit cards. Borrowing close to your limit with a credit card can also damage your credit score, and this is not the case with Business Lines of Credit.
Depending on your desired borrowing limit, the requirements for a Business Line of Credit can be among the easiest to qualify for on the market, and applications are approved in as few as 1-3 business days.
What Are The Downsides To A Business Line Of Credit?
The advantages of Business Lines of Credit are somewhat reserved for businesses with strong financials and excellent credit scores. Weaker businesses may still be approved, but they will not have access to large borrowing amounts and favorable interest rates.
If you are not already approved for a Business Line of Credit and your business runs into trouble, it is unlikely you will access large borrowing limits and low interest rates. The best time to apply for a Business Line of Credit is when your cashflow is strong, but applying for business financing is usually the last thing on a business owners mind when things are going well.
Who Qualifies for Business Lines Of Credit?
Approved businesses generally met the following criteria:
- Annual Revenue: $75K+
- Credit Score: 550+
- Time In business: 6 Months+
How To Apply
Our application process is fast and easy, taking just a few minutes to complete, and funds can appear in your bank account in as few as 1-2 business days from approval. Here is how to apply:
Step 1: Contemplate Your Needs
Before you apply, make sure that the funding program is the right solution for your business’s needs. Consider whether you will be able to use the funds for your desired purpose, and if the repayment structure is conducive to your cash flow. Take your time to determine the amount of funding your business will most benefit from.
Step 2: Collect Your Documents
Here is what you will need to submit with your application:
- A valid driver’s license
- 1 voided business check
- Last 4 months of bank statements
- Last 4 months of credit card processing statements
Step 3: Fill Out Our Online Application
To start the application process, give us a call or fill out our short online application. We will ask you to provide some basic information, along with your desired funding amount.
Step 4: Speak to a Representative
Once you apply, a representative will reach out to you, so make sure you have all your documents ready from ‘Step 2’. The representative will explain the repayment structure, rates, and terms you qualify for. This will ensure that there are no surprises or hidden fees during repayment. Once you decide, you will be given a final application to submit along with your documents.
Step 5: Receive Approval
If you’ve been approved, you’ll hear back from us within 24 hours. Funds should then appear in your bank account in 1-2 business days.
What If I'm Declined?
Your application may be declined if your business’s cash flow is insufficient at the time of your application. This product places an emphasis on monthly revenue, so applicants with strong sales in the previous 4 months are more likely to receive approval than those without. You may also be asked to provide statements going back farther, even from a previous year.
In some cases, we may conclude that taking on more debt would do more harm than good for your business. In this case, we might recommend a different, more affordable business financing tool. At Allenby, we can help you explore your options and point you in the direction of the most sensible choices.
How to Get Funding
Follow our easy 3-step funding to get cash into your account within 24-48 hours.
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