What is a Business Line of Credit?

A business line of credit gives access to a credit line to draw from when you need capital. Unlike a traditional business loan, you have the flexibility to borrow up to a set amount (typically anywhere from $50,000 to $250,000, repaying only the amount you withdraw, with interest.

Operating a business we know emergencies happen, draw on your small business line of credit to handle cash flow gaps, purchase inventory, or address almost any other emergency or situation.

Business Lines of Credit vs. Bank Term Loans

What actually makes a line of credit different from a traditional term loan?

Business lines of credit refresh your credit availability as you pay down principal, term loans do not refresh so once you use your funds you must pay back that amount over a set period of time.

If you’re comparing a small business line of credit with a traditional term loan, lines of credit are ideal for businesses that have repeated cash flow issues while term loans often make more sense when it comes to one-off business investments. But that doesn’t mean you can’t or shouldn’t use a business line of credit for business purchases if its something like office supplies or small ticket items, too.

The Benefits of a Business Line of Credit

The biggest advantage of a business line of credit is its renewability: you can draw out funds, pay them back, and draw again while helping maintain your cash reserve balance.

Since lines of credit are so flexible, they can also be used for payroll, seasonal expenses, and unforeseen problems or investments, as well as larger purchases.

This flexibility is what makes a business line of credit such a valuable loan product for small business owners.

Business Line of Credit vs. Credit Card: What’s the Difference?

Although business lines of credit and business credit cards are both forms of “revolving” credit, there are a few important differences you should be aware of:

● Credit cards usually have higher interest rates.
● Credit cards charge additional fees for cash advances and, often, balance transfers.
● Credit cards typically require payments on a monthly basis while business lines of credit usually don’t.
● Lines of credit give you access to cash.

How Do You Apply for a Business Line of Credit?

A business line of credit application can be a very easy process and done completely online. We have a quick, streamlined application, thanks to the use of technology in our underwriting processes.

A line of credit offers smaller, shorter-term options that will come with an easy and fast application process.