Business Line of Credit

You only pay on the amount you draw – not your total credit line. That means that – if you draw $50,000 from your $100,000 credit line – you’re only paying interest on the $50,000.

This structure allows you to keep your line of credit on the sideline for when you need it without worrying about unnecessary interest.

Interest rates range from 5% to 60%, depending on your business credit score, annual revenue, your time in business, and your willingness/ability to offer collateral.

Collateral, which can be equipment, real estate, or strong receivables, serves as an extra layer of protection against defaults for the lender. By offering an asset to secure your financing, you reduce the level of risk for the lender and, in turn, decrease the interest rate you’ll receive.

Yes, you can secure a business line of credit with a lower FICO score, but you should also be realistic about the terms you qualify for.

Lower FICO scores are seen as “risky” by lenders, so they’ll offer higher interest rates and lower credit limits as a result. You may have to offer collateral, too, as a method of securing the financing.

If your credit score is less than favorable, it’s worthwhile to consider proactively strengthening it before applying for financing. Not everyone has enough time to do this, of course, but even minor increases can yield big savings when it comes to interest rates.

If you’re looking to get a business line of credit, you’ll need to approach the situation strategically. Here are some steps to take.

• Evaluate Your Funding Need: First and foremost, you’ll need to understand why you need business funding and how fast you need it to meet your goals. You should also review your business finances and determine a safe level of debt to take on.
• Review Lender Requirements: From one to another, each lender has different requirements, preferred industries, and nuances that affect your benefits. Understand the qualifications of multiple lenders, so you can apply with more than one and give yourself options to choose from.
• Proactively Gather Documentation: Coming prepared with all the information your lender needs is one of the best ways to speed up the funding process. If you’re unsure of what documents you need to bring, don’t be afraid to reach out directly to the lender and ask.
• Apply and Compare Your Options: Once you have a list of a few top lenders where you either meet or exceed the minimum qualifications, you’ll apply with each and compare your approvals. Having options at this stage gives you negotiating power, which can serve to improve your offered terms.

At National Business Capital, you can simplify the process above and gain a financing partner simultaneously. With one easy application, you unlock all the most competitive offers you qualify for within our diverse lender platform. Your personal Business Finance Advisor helps you select the best one with your best interest placed at the forefront.