Business Lines of Credit

About Business Lines of Credit

A small business line of credit is a financial tool that has much in common with a business credit card. Unlike a term loan, a small business line of credit does not provide a lump sum of cash that requires a monthly repayment schedule. Instead, it offers the borrower access to capital up to a certain amount. Similar to using a business credit card, you can access the capital as you need it to pay for business expenses. The balance on a line of credit is “revolving,” meaning that you can carry the balance from month to month and interest is calculated based on the amount you draw. As you repay that amount (called the “principal”), your available credit goes back up to your limit, allowing you to replenish your credit and use it again.

When small business owners start looking for funding, many start their search by researching term loans and business lines of credit. One key difference between those two options is that a business line of credit is flexible in ways a term business loan is not. With a business line of credit, you could borrow an amount up to your credit limit, and you would pay interest on the amount that you borrowed. Fees vary depending on the lender and the precise line of credit you choose; look out for inactivity fees, and other additional fees. The main constraint of a line of credit is that you cannot go above and beyond your credit limit.


Pros

  • Capital is readily available
  • Only pay for what you use
  • Great way to build business credit
  • Evens out cash flow
  • Bad credit is acceptable

Cons

  • May require collateral
  • Lower borrowing limits
  • Higher rates for lower credit scores

Three Reasons Why Fundbox is a Great Fit

1

Lightning fast:

Sign up in seconds. Get a credit decision in under 3 minutes.*

2

Incredibly easy:

If approved, click to draw funds. They’ll arrive as soon as the next business day.

3

Fair and transparent:

No fees to apply. Only pay when you draw funds. Repay early and save.

Business Lines of Credit - Quick Facts

Business lines of credit allow you to access funds easily and as you need them. Credit limit amounts typically range from $5,000 up to $1 Million. Funding time takes about 24 hours from the time of application. There is no minimum credit score required. Repayment terms can range from 6 months to 5 years.

Funding Amounts

$5,000 – $1M

Time to Fund

24 – 48 Hours

Credit Rating

No minimum credit score

Terms

6 Months – 5 Years

Get a Line of Credit for your business!

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Business Lines of Credit Highlights

Here are some highlight features of Business Lines of Credit


Funds Readily Available

A business can draw on the line of credit, easily and as needed through a simple withdraw request!

Only Pay For What You Use

Unlike a traditional term loan, you only repay what you use with an agreed-upon rate and term. Capital is accessible as you need it!

Build Business Credit

Repaying a business line of credit on time within the agreed-upon term can be an excellent way to build your business credit score!

Even Out Cash FLow

The easy access to capital is beneficial at times when you need to handle cash flow gaps, buy inventory, or simply just need more working capital!