When is a revolving line of credit right for my business?

A business line of credit is very flexible and can be used for any business purpose. It’s often used by seasonal businesses to cover operations during slower months, for example.

Do you need collateral for a revolving line of credit?

You can obtain a revolving line of credit without needing collateral. This type of credit is called an unsecured line of credit, and it does not require you to put up any collateral. However, it can be more expensive due to higher interest rates. Lenders take on a greater risk when lending unsecured funds, which is why they charge higher rates of interest.

What is the difference between a small business loan and a line of credit?

A small business loan is a lump sum of money that is given to the borrower upfront and repaid over time with interest. It is ideal for one-time investments or larger expenses. A line of credit, on the other hand, allows the borrower to access a predetermined amount of funds as needed and only pay interest on the amount used. It’s better suited for recurring or ongoing expenses.

What other small business loans can I get in addition to my line of credit?

You may have a project that could benefit from other types of small business loans beyond your business line of credit.

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Revolving Line Of Credit Overview

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$1K - $275K

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what is

What is a Revolving Line of Credit?

A revolving line of credit offers considerable flexibility, making it a valuable tool for businesses that experience varying capital needs. This flexibility allows companies to manage cash flow more effectively, ensuring they have access to funds when they need them without the continuous application process required for traditional loans. The ability to manage a revolving line of credit effectively can significantly contribute to a business’s ability to adapt and grow in dynamic market conditions.

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How to Apply for a Revolving Line of Credit

STEP 1

Get Pre-qualified

To get pre-qualified for a True Revolving Line of Credit, click the "Apply Now" button and enter general information about your business.

STEP 2

Await Approval

Once processed, one of our Business Consultants will contact you to discuss the available options for which you qualify.

STEP 3

Receive Funding

Once approved and the offer is accepted, the funds will available to be drawn and directly deposited into your bank account, allowing you immediate access to capital

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Documentation and Qualifications
for a Revolving Line of Credit

Documentation Needed:

Application
4 Months of Business Bank Statements
Bank Verification
Utility Bill/Proof of address

Qualifications:

24+ months in business
$100,000+ average revenue for the last 3 months
600+ FICO

To begin the application process for our financing options, applicants must submit a complete application form, which is the first step in assessing eligibility. Additionally, applicants are required to provide three months of recent business bank statements, which help us understand the financial health and cash flow patterns of the business. Verification of the bank account is also necessary to confirm the legitimacy and operational status of the account associated with the business. Furthermore, a utility bill or another proof of address is required to verify the physical location of the business. These documents collectively ensure that all information provided is accurate and up-to-date, facilitating a smooth and efficient approval process.

Our financial products are designed to support established businesses aiming for growth and stability. Therefore, applicants must have been in business for at least 24 months, demonstrating their ability to sustain operations over a significant period. Additionally, businesses should have generated an average revenue of at least $100,000 over the past three months*, which indicates strong performance and the potential for further development. A minimum FICO score of 600 is also required to qualify, reflecting a responsible credit history and financial management. These criteria are set to ensure that our financial solutions are extended to businesses with a solid foundation and a clear trajectory for success.

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Frequently asked questions

A revolving line of credit is a flexible financing option that provides businesses with ongoing access to funds. Here are its essential characteristics:

Credit Limit: Lenders set a maximum borrowing amount based on creditworthiness and financial health. Businesses can access funds as needed, up to this limit, ensuring financial flexibility.

Flexible Access to Funds: Withdraw funds anytime, repay, and borrow again without reapplying—ideal for managing fluctuating expenses and cash flow.

Interest on Borrowed Amounts: Interest accrues only on the funds you use, not the total credit limit. Rates are often variable, meaning they can change with market conditions.

Repayment Terms: Monthly payments typically include interest and a portion of the principal. Paying more than the minimum or clearing the balance reduces interest costs and strengthens business credit.

Multiple Access Methods: Funds can be accessed through bank transfers, checks, or a linked card, ensuring quick and convenient financial support.

Emergency Business Funding: Acts as a financial safety net for unexpected expenses, providing businesses with a reliable backup plan.

Cash Flow Stability: Helps businesses navigate seasonal fluctuations and maintain steady operations by bridging income gaps.

Project-Based Financing: Supports business growth by funding projects with uncertain costs, allowing for strategic investments without upfront financial strain.

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Revolving Line of Credit:
Pro Vs Cons

Revolving line of credit advantages

Funds from a business revolving line of credit can be used flexibility is particularly advantageous over traditional business term loans, which typically have more rigid usage requirements.

With a revolving line of credit, interest is charged only on the amount of money actually borrowed, not on the entire available credit line. This feature makes it a more cost-effective option for managing business cash flow, especially during periods of fluctuating revenue.

A revolving line of credit can smooth out cash flow, particularly for businesses with cyclical sales patterns or irregular revenue streams, providing essential funds during low revenue periods and enhancing business financial management.

Regular use and consistent repayment of a revolving line of credit can help a business build or improve its credit rating. A stronger credit score can facilitate easier and potentially cheaper future financial transactions, supporting business growth.

Revolving line of credit disadvantages

Although typically lower than credit card rates, the interest rates on revolving lines of credit can be higher than those on traditional term loans, especially if they are unsecured. This could increase the cost of borrowing for business operations.

Most revolving lines of credit feature variable interest rates, which can lead to unpredictable borrowing costs if the rates increase, impacting business financial planning.

The ease of accessing funds can lead to overspending and financial mismanagement if not carefully monitored. Businesses must be vigilant to ensure that this flexibility does not lead to unsustainable debt levels.

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pros v cons