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BUSINESS LINE OF CREDIT

WHAT IS BUSINESS LINE OF CREDIT?

This refers to an accumulated pool of funds, from which the borrower can borrow a certain amount, as per his requirement and pay interest only the funds drawn. The workings are similar to a credit card working.

Alternatively some funding companies, also offer a Line of Credit fund basis the inventory. In this scenario, the most non-perishable inventory is eligible for the funding.

Like a safety net in practice, Line of credit is available whenever your business requires it, but holds no obligation to use it.

REVOLVING OR NON-REVOLVING BUSINESS LINE OF CREDIT LOAN

Revolving – Similar to a credit card, once the withdrawn funds are paid back to the lender, the total line of credit becomes available to borrow from

Non-Revolving – Unlike the revolving line of credit, in this case, once you have exhausted the limit by borrowing the complete line of credit, you have to re-apply to secure a fresh line of credit.

ADVANTAGES OF BUSINESS LINE OF CREDIT
  • Interest is levied only n the amount of actual funds withdrawn
  • No hidden fees
  • Ready capital availability
  • Credit score doesn’t hamper the ability to secure a loan (however rate of interest may be higher for a borrower with a bad credit score)
  • Lower interest rates and closing costs than traditional loans
  • Turnaround time is much quicker than other funding options
  • Lenders offer multiple payment options ranging from daily to weekly to monthly
  • Businesses can draw multiple times from within the set line of credit
ELIGIBILTY

There are no pre- set criteria to acquire a Business Line of Credit however
a) Credit score of 600 and above is preferred
b) At least 1-year business standing (some lenders consider 6+ months in business)
c) Revenue of 120k and above revenue (varies with various lenders)

FINANCIALS

ESTIMATED VALUE OF BUSINESS LINE OF CREDIT

Between $10k to $1 million

LOAN TERM

6 months to 5 years

INTEREST RATE

7% TO 25%

The interest decided takes into account multiple factors such as the business Credit History, Business Standing, Amount of Line of Credit etc,

DOCUMENTS NEEDED
  • Driver’s License
  • Voided Business Check
  • Bank Statements
  • Credit Score
  • Outstanding Invoices