A business line of credit is a financial product that provides business owners with a safety net of available capital. Much like a personal or business credit card, you can choose when to use those funds and only pay interest on the amount you borrow.
LendRev can provide access to capital fast because we offer a direct path to the lending marketplace, empowering businesses like never before. Just complete one free application and LendRev gets to work, searching our network of lending partners where they compete for your business.
Fill out a single, free online application*
Speak with your personal funding coordinator
Receive same-day approval with proper documentation†
Receive the funding you need in as little as 24 hours‡
Up to $100,000
Up to 12 Months
20-40% Variable Rate
Determined by Borrower
As Quickly as 24 Hours
|Business Line of Credit||Business Loan|
|Interest is only charged on the amount you withdraw from your account.||Interest is charged on the entire amount of the loan.|
|Lenders may increase your limit and alter your payment schedule as they become more familiar with your payment habits.||The amount of the loan and payment schedule do not change.|
|High credit scores are not essential to the application process for alternative lenders.||Traditional lenders do require applicants to have a strong credit score.|
|Funds can be delivered as quickly as 24 hours after your application has been approved.||It can take 1 to 2 months before the loan is secured and cash is available.|
|The application can be completed in as little as 10 minutes, with minimal documentation required.||Extensive vetting of the business is done, requiring financial statements and other personal information.|
|Additional fees include maintenance and draw fees.||Additional fees include origination fees and closing costs.|
|You decide how much to withdraw and when to repay the funds, as long as the funds and interest are paid in full by the end of the term.||You receive the entire loan amount up front, and submit the same payment every month until the loan is paid in full at the end of the term.|
A business line of credit is a flexible form of financing that allows you to withdraw only the funds you require from an account containing a lender-approved amount. You only pay interest on the amount you withdraw. Once that amount has been repaid, you’re free to withdraw it again, which is why this type of funding is called “revolving” credit. You borrow funds, you repay those funds, you’re free to borrow those funds again for the life of the agreement. Both traditional lenders and online lenders offer lines of credit. LOCs may be short-term or medium term and may or may not require the funds to be secured with collateral.
When you complete a LendRev application, we immediately get to work finding you the best financial product for your company. Our network of lenders competes for your business, which means quicker approval times, more beneficial terms, and better rates for your business. When we find financing matches, your personal funding coordinator will assist you in completing the process and answering any questions you might have.
The minimum qualifications for a business line of credit differ between a traditional lender, like a bank or a credit union, and an alternative online lender. Although traditional lenders typically provide lower interest rates, their credit and documentation requirements are more demanding. For business owners with good credit, more years in business, and higher monthly revenues, a line of credit from a bank would be a better bet. However, for newer business with lower monthly revenues or lower credit scores, revolving credit from an alternative lender would be the better choice.
Additionally, alternative lenders may work with you to increase your credit line and adjust your payment schedule once they’ve had time to become familiar with your payment history.
Once you’ve decided that a business line of credit is the right financial product for your company, simply fill out a single, free LendRev application. Your application will immediately go out to our lending network, and your personal funding coordinator will contact you to help you complete the process and answer any questions you might have.
When evaluating your application, our lenders will take the following into consideration.
The longer your company has been in business, the better terms you’ll be able to receive for your line of credit. This doesn’t mean younger companies will be left out in the rain. It just means they might have to meet additional requirements and/or pay higher interest rates.
While your personal credit score will have a major impact on your ability to secure a line of credit from a bank, online lenders are more flexible when it comes to your score. As with any funding product, the better your credit score, the lower your interest rate will be.
Any lender will want to know if you have revenue sufficient to meet your financial obligations, particularly your ability to make payments on your line of credit. They’ll use your revenue information to determine terms and the extent of credit they’re willing to extend.
Your business’s average bank balance helps lenders determine if your business is profitable, how prepared you are for unexpected expenses, and if you have a healthy cash flow.
As with most things in life, timing is important when considering when to apply for a line of credit for your business. Waiting until the timing is right can save you money on interest and help secure a higher credit limit.
Although it may sound counter-intuitive, the best time to apply for a business line of credit is before you actually need it. Because one of the main advantages of having an LOC is the flexibility to respond quickly to unexpected expenses, you want to have your safety net in place before you need to fall back on it.
Applying while your revenues are up makes your application more appealing to lenders. The more financially fit your business is at the time of your application, the better your terms will be.
Likewise, it’s also important to know your credit score before applying. This will give you to opportunity to evaluate other forms of revolving credit you may have and make a plan to pay them down. If there are any errors, file a dispute and apply once the matter has been removed from your credit report. Improving your credit score can take time, which is further motivation to start the application process before you actually need the funds.
A business line of credit and a business credit card have similar repayment processes, with the exception that an LOC is not available indefinitely. Terms for a line of credit typically range from six months to five years. Although you can choose to pay off your outstanding balance at any time, thus saving on interest, the balance, including interest, must be paid in full when the term ends.
A business line of credit, like any form of revolving credit, should be used responsibly. An LOC is not the right product for your company if your intended purpose is to use the funds for large capital investments, like purchasing real estate or doubling the capacity of your production line. It’s also not the right product if the funds would be used to cover normal operating expenses.
Funds from an LOC should be used to respond to time-sensitive or emergency situations. For instance, if you have an outstanding invoice on a large order, you could pull funds from your LOC to cover payroll. If an essential piece of equipment breaks down, your line of credit could be used to cover the repairs.
When accessing funds from your LOC, keep in mind that the way you use and repay those funds will have an impact on your credit score and your ability to access capital in the future.
* In order to secure funding, LendRev requires at least three months in business with a minimum of $10,000 in monthly revenue.
† With the appropriate information and documentation available, it’s possible to have your application approved in as little as one hour.
‡ Many of our term loan and merchant cash advance providers can be very fast, providing funds in as little as 24 hours. SBA-backed lenders may take two weeks or more because Small Business Administration loans require significantly more documentation.