Small Business Credit Lines

Do you need small business credit lines for working capital?

In today’s post we are going to show you how to get a credit line whether you’re a startup or existing business. The three major types of business lines of credit we’re going to talk about are 100% unsecured and have no restrictions on the use of funds.

By the time you finish reading this post you will know what it takes to qualify for each small business credit line and how to get started.

First, let’s cover what a small business credit line is. A small business line of credit is a revolving credit product issued by a bank or lender that allows you to draw funds on the entire credit limit issued and you can borrow money against the line whenever you need it.

With a business credit line, you have a great deal of flexibility because you can repay the balance in full or pay the minimum monthly payment every month.  Depending on the type of small business line of credit you have, the minimum monthly payment can range from 1% – 5% of the outstanding balance.

Now you can borrow against the line of credit over and over again based on how much credit is available. You can access the credit line by phone or online, access checks or business credit cards depending on the type of line you acquire.

Now the type of small business credit line you can get is going to be based on two major factors.

Is the credit line going to be credit based or revenue based?

It can also be a combination of both if you qualify and want to maximize your funding ability.

Let’s say you’re a startup business; obviously you have no revenues as a business so you are not going to apply for lines of credit based on revenue.  As a startup you will need to focus on a credit-based line of credit. This type of credit line is based on the personal creditworthiness of the owner.

Now, let’s say you have an existing business that has good revenues and you have strong personal credit. If that’s the case you want to look at credit lines that are credit based only and credit lines that are credit based and revenue based.

What if your business has revenues but you have bad personal credit? If that’s your position then you will want to consider lines of credit that are strictly revenue based. These types of small business credit lines do not look at your personal credit.

To sum it all up, the most important thing you need to determine is what type of small business credit line should you apply for.

For credit-based lines you want to be in the 680+ score range. For credit-based and revenue-based lines the credit rating and net income of the business (min $25k annually) is what is looked at for approval. For revenue based only lines a lender will review the gross income of the business not personal credit.

Revolving Small Business Credit Lines: Credit-Based Only

The first type of credit line is the revolving small business line of credit also known as business credit cards. This is one of the most popular funding tools because it’s strictly based on the strength of your personal credit and does not require any documentation. (stated income business credit lines)

Now I’m not talking about your standard business credit cards. Unfortunately, the majority of all business credit cards in the marketplace are what I call glorified personal credit cards because they report to your personal credit reports.

Business credit cards that report to your personal credit do not allow you to truly separate your personal credit from your business credit. Using those types of cards will impact your personal credit utilization, scores and credit ability.

With our Business Credit Lines Program, we set you up with 4-5 business credit cards that only report to the business credit reporting agencies. This allows you to have true separation between personal and business credit. Since these cards report they establish your company’s credit file and business credit scores.

What’s powerful is when other banks, lenders or suppliers want to check your business credit, you will now have a file and it will show that the company has bank issued credit. This also positions the business for future credit limit increases as well.

Small Business Credit Lines Program: What you will get:

• Receive 4-5 business credit cards
• $25,000 to $150,000 in combined credit limits
• 0% intro APR for 6 to 15 months
• Annual APR rates 9.9 to 19.9%
• Minimum monthly payment from 1-2%
• Reports only to business credit reporting agencies
• Establishes business credit file for your business
• Establishes 4-5 business accounts reporting on your business credit report
• Establishes a business credit rating for your company

Requirements

• 680+ credit scores with all three agencies (Equifax, Transunion & Experian)
• Startup or existing business (LLC, S Corp, C Corp, etc.)
• Any bankruptcies must be 10+ years old
• Credit partners are accepted
• Order your tri-merged credit report

CLICK HERE to pre-qualify

Revolving Small Business Lines of Credit: Credit+Net Income Based

Let’s talk about the revolving small business line of credit that’s credit and net income based. This is an actual bank line of credit that enables you to draw funds from the credit line through the phone, online, wire transfer or convenience check.

With a bank line of credit, banks look at two things; the strength of your personal credit and your company’s net income to support the line.  If your business produces $25,000+ a year in net income and you are able to provide tax returns to prove it then you may qualify for a bank line of credit for your business.

With a bank line of credit, you can draw up to 100% of the credit limit in cash and use the line of credit only when you need it. It’s also just as flexible as a business credit card because you can pay the balance in full or pay a minimum monthly payment which is about 2-5%.

Small Business Bank Line of Credit Program: What you will get

• Receive 3-4 bank lines of credit
• $25,000 to $200,000 in combined credit limits
• Annual APR rates (7 to 12%)
• Minimum monthly payment from 2-5%
• Ability to draw 100% cash out (no cash advance fees)
• Reports only to business credit reporting agencies
• Establishes business credit file for your business
• Establishes 3-4 business accounts reporting on your business credit report
• Establishes a business credit rating for your company

Requirements

• 680+ credit scores with all three agencies (Equifax, Transunion & Experian)
• 2+ years in business
• Incorporated business (LLC, S Corp, C Corp, etc.)
• Net income of $25k+ annually (verifiable)
• Credit partners are accepted
• Order your tri-merged credit report

CLICK HERE to pre-qualify

Revolving Small Business Line of Credit: Gross Income Based

Now let’s talk about the third type of small business line of credit which is gross income based. This credit line has no personal credit check since qualification is strictly based off of the company’s bank account deposits.

This type of credit line is heavily advertised on the internet by companies such as OnDeck and Kabbage. What’s important to realize is even though this type of funding is labeled as small business lines of credit they are much different than traditional lines.

The major difference is in cost and how the repayment process works. Typically, when you draw on your credit line the balance must be paid in full within 6 months with payments taken out daily or weekly.

Revenue Based Line of Credit: What you will get

• Receive a small business line of credit up to $100k
• Repayment terms up to 6 months on each draw
• Ability to draw 100% cash out (no cash advance fees)
• Does not report to any credit reporting agency

Requirements

• Minimum $25k in annual gross revenue
• Minimum $500 average daily balance in business checking
• At least 6 months in business

CLICK HERE to pre-qualify

Well, there you have it, three types of unsecured small business credit lines that you can obtain as a startup or existing business. Keep in mind as a business owner, why not have multiple types of access to funding?  Remember, every type of funding vehicle serves a certain purpose, so the more diversity you have and access to funding and lines of credit the more flexible and the better decisions you can make as a business owner.

Read to apply for small business credit lines but have questions? Submit your information below and a funding specialist will contact you within 24 hours. Plus receive my FREE business credit seminar audio and BCIC newsletter ($597 value)=>

To Your Success in Business and in Life!

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About the author

Marco Carbajo is a business credit expert, author, speaker, and founder of the Business Credit Insiders Circle. He is a business credit blogger for Dun and Bradstreet Credibility Corp, the SBA.gov Community, Business.com, About.com and All Business.com. His articles and blog; Business Credit Blogger.com,  have been featured in ‘Fox Small Business’,’American Express Small Business’, ‘Business Week’, ‘The Washington Post’, ‘The New York Times’, ‘The San Francisco Tribune’,‘Alltop’, and ‘Entrepreneur Connect’.