What is a business line of credit?
A business line of credit is a simple interest loan which can be used long term for business expenses or working capital.
How does it work?
A business line of credit is an open ended loan that gives business owners a set loan amount extended for as long as the client wants to keep it open. The business owner makes draws on the line of credit whenever they need money for payroll, marketing, supplies, etc.
The business owner only pays interest on what they borrow and as the line of credit gets paid back you can re-borrow against the line of credit.
How long does it take?
Lines of credit can take 48 hours to a couple weeks depending on loan size and what collateral you are using to obtain the line of credit.
The great thing is that you don’t need collateral anymore as your cash flow can be used as your collateral to obtain a line of credit. If you have a 620 FICO score and you have been in business for 1 year you can qualify. Cash flow lines of credit range from $10,000 – $1,000,000.
You can also setup lines of credit based on receivables(extended net term invoices) and inventory, these are referred to as asset based lines of credit and they can take a couple weeks to set up but they offer much larger loan amounts and they can be tailored to fit the needs of your business. There is no maximum loan size on an asset based line of credit.
Who is this loan for?
Anyone who has been in business for at least 1 year and has at least $250,000 in annual gross sales.