How To Get a Business Line of Credit
Line of Credit: Advantages and Disadvantages
While the flexibility and revolving nature of a line of credit make it a great fit for certain circumstances, it may not be the perfect financing fit for every need.
FAQs About Business Line of Credit Requirements
Is a business line of credit considered income?
The cash received from your line of credit is not income. While it does give you a quick cash infusion, you are borrowing the money and paying interest on the amount borrowed.
What are the uses for a business line of credit?
Unforeseen expenses can happen to any business and a business line of credit can give you the peace of mind of knowing you’ll have an extra source of funding ready anytime you need it. A business line of credit can be used for a wide variety of purposes, including buying equipment, emergency repairs, renovating a storefront, purchasing inventory, and paying employees.
Business lines of credit can be particularly helpful for businesses that need some level of flexibility. They can be great for businesses in industries that face seasonal fluctuations and may occasionally need extra money to stock up on inventory or hire extra employees ahead of a busy time of year. If you’re planning a series of projects that would require extra funding now and then, you might like the flexibility a line of credit can offer.
Borrowers may not use their business line of credit for personal use. A financial penalty may result in the event that your lender finds you using your business line of credit to cover personal expenses.
Can you use a business line of credit for personal use?
No. Borrowers may not use their business line of credit for personal use. A financial penalty may result in the event that your lender finds you using your business line of credit to cover personal expenses.
Does opening a line of credit hurt your credit score?
Opening a new business line of credit may lower your credit score in the short term if the lender makes a hard inquiry on your credit. While this may cause your credit score to drop a few points temporarily, repaying your line of credit in a timely manner can actually help you build your credit.
Subject to approval.
*Bank statements must be from the business banking account for the business receiving funds.
**The rate is a simple interest rate calculated from total repayments over 26 weeks.