People Also Ask:
When Is a Business Line of Credit a Good Idea?
Due to the lower borrowing limit, shorter terms, and interest system, it’s best to use a Business Line of Credit for short-term initiatives. Examples include ordering inventory, covering operational expenses for a month or two, or hiring more workers for a last-minute project.
Which Type of Lender Is Best For a Business Line of Credit?
This depends on your ability to meet requirements like credit score, annual revenue, or time in business. If you can meet these requirements with flying colors, you might consider seeking funding from a bank or credit union. These lenders offer higher borrowing amounts, lower rates, and longer terms. However, their application process is considerably more involved than an alternative or online lender. And you may have to provide collateral. Thus, if you cannot meet these requirements, you may still be able to access a substantial borrowing amount through an online lender, even with bad credit.
What Is a Revolving Line of Credit?
This is one of the first questions you should ask when seeking a line of credit: Is the product revolving or non-revolving? With a revolving line of credit, paying back what you borrow makes those funds available again. As long as you continue to pay off your total balance, your terms and interest rate stays the same.
A non-revolving line of credit, on the other hand, does not replenish when you pay off the total balance. You borrow, pay it back, and then it’s gone.
Should I Get a Business Line of Credit or a Business Credit Card?
A Business Line of Credit is essentially a business credit card with a higher borrowing limit and lower interest rate. Hence, this decision primarily depends on the cost of the expense at hand.
If you’re looking to cover a few minor, recurring expenses, a business credit card might be the better choice. If you’re looking to cover more considerable temporary costs, you should probably pursue a line of credit. To clarify, a Business Line of Credit makes more sense when you regularly need extra cash for more substantial expenses. A business credit card, on the other hand, is best for smaller expenses that don’t increase in cost.
Is a Business Line of Credit My Best Option?
Will a business line of credit work for you? At United Capital Source, we’ve helped get lines of credit for hundreds of business types, from retail to landscaping to auto repair. If your business experiences lots of seasonal fluctuations, this option is probably your best one. When considering a business line of credit, ask yourself these questions:
Do I need…
- To make several quick investments instead of one long-term investment?
- Flexibility instead of a fixed repayment schedule?
- Quick access to funds?
If you answered yes to these questions, then a business line of credit is probably the right choice for you.
Can I Get a Business Line of Credit with Bad Credit?
This product is available to borrowers with bad credit, but your borrowing limit may be lower and your interest and terms will be less convenient. However, if your cash flow is very strong, poor credit may have less impact on your borrowing limit, interest, and terms.
Also, we’ve repeatedly mentioned that the best time to apply for a Business Line of Credit is before you actually need the money. Thus, if you’re concerned about poor credit impacting your borrowing limit or interest, you should definitely work on improving your credit score before you apply. UCS even offers credit repair services for this exact situation.