How Does A Business Line Of Credit Work?
Small business owners commonly run into financial hurdles that they did not plan for (that’s business).
When this happens, a business line of credit is often the savior to just about any economic concern.
A business line of credit works similarly to a credit card. You apply for the funding and, when you are approved for a certain amount, you have access to the funds as you need them up to your credit limit.
As you make payments on your current balance, you can use that money again until your term limit is reached.
Line of credits typically accrue a principal amount and interest on the current balance. Rates will vary based on your credit and other qualifications.
While traditional banks offer line of credit funding to small business owners, their requirements for approval are frequently high and their loan process can be lengthy.
We work directly with more lenders so you have a better chance at approval with comparative rates.
However, if your credit and qualifications are less than optimal, you may be approved at higher interest rates because of the risk the lender takes in financing your business.
To qualify for a small business line of credit, you typically (but not always) should meet the following minimum criteria:
- Have a personal credit score of 600 or above
- Generate a minimum average revenue that varies based on your expected loan amount
- Have a minimum of six months of operating time in your business.
A selling point for these types of funding is that the approval process is easier and there is less documentation involved.
For small business owners in need of fast working capital, the business line of credit may be the way to go.
Get qualified for business funding today by visiting our funding platform ROK Financial here.