A Line of Credit is a determined credit limit that is extended to the borrower. Business owners can benefit from purchasing a Line of Credit as it gives them access to a stream of capital to aid them with cash flow, operational expenses, and additional costs that come with running a business.

They are good for flexible funding needs, and businesses that experience known cash flow fluctuations may want to consider purchasing a Line of Credit.

There are different kinds of Lines of Credit that business owners can acquire.

Revolving Line of Credit

  • You can take funds from the credit account which will be considered against your balance as frequently as you desire, but permitted up to a defined limit.
  • Monthly payments are required after borrowing from your line to payback the account balance. You are still able to borrow additional funds with an outstanding balance as long as you have not met the limit.
  • Individual withdrawals have the same loan terms and is treated as a singular loan.

Non-Revolving Line of Credit

  • Unlike Revolving Credit Lines, every time you borrow from a Non-Revolving Line of Credit the transaction is considered as an independent loan with separate terms.
  • The Line of Credit will have specific terms regarding replenishment included in the contract. The credit available to you may not replenish even after paying your existing balance. You should read the agreement terms carefully, and consider a Revolving Line of Credit if you want access to borrow more than the allotted credit line.

Secured Line of Credit

  • The Line of Credit is “Secured” by your assets. Collateral is required to be eligible for a Secured Line of Credit. The benefit of offering up collateral for this type of credit line is the lower interest rate, more agreeable terms, and higher account limits.

Unsecured Line of Credit

  • Unsecured Lines of Credit afford you higher amounts and do not require any collateral. The product does include additional costs, shorter terms, and potentially higher interest rates.

Criteria

  • Fico Score: 650+
  • Line of Credit Max: $250,000
  • Rates: 0.5% – 2% per month
  • Term Length: 6 – 12 months
  • Time in business: 1 year+
  • Time to Fund: 2 – 5 days