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How to Get a Business Line of Credit

By on May 20, 2022 4 min read
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How to Get a Business Line of Credit

Is your small business in need of ongoing capital? Maybe you need funds in case of an emergency expenditure, or you know you’re going to make a big purchase soon to help scale and expand your business. There are many ways to access capital to grow your business. You can sell equity or assets of your business, apply for different types of loans, or obtain a business line of credit. This last one can sometimes be confusing since it can seem similar to a credit card, but they are different.

What advantages does a line of credit have over a regular loan? We’ll break down the structure of a business line of credit and contrast it with a traditional loan. We’ll also show you how and what you need to apply for one and, ultimately, if it’s the right strategy for raising money for your business. 

What is a Business Line of Credit? 

A business line of credit gives your business access to a fixed amount of money, which you can use at your convenience. This is different from a loan where you borrow a lump sum of money all at once that you then need to pay back. A line of credit is more similar to a credit card, where you can use what you need when you need it. It will not accrue interest when paid down within the timeframe agreed on by the lender, and you can dip into it again when the balance is paid down. 

Line of Credit vs a Business Loan

While a small business loan and a line of credit are similar; there are a few distinct differences between a loan and a line of credit. Unlike loans, which may be intended for only particular expenses like equipment, you can use a business credit line to pay for whatever you need, as long as it doesn’t exceed your line of credit. Another benefit is that you aren’t required to use a line of credit or make payments on it right away; unlike a loan, you can leave it untouched until you need it. 

Depending on your credit issuer, a line of credit may come with bonuses and perks, like cash back or mileage options. Additionally, most credit issuers can hold multiple credit cards on the account, so your colleagues or staff can access the credit with company credit cards

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Benefits for Small Businesses 

For businesses with under ten employees, a line of credit brings many of the benefits mentioned above. They provide quick access to money with very flexible payback and usage. Additionally, most lenders will give out numerous cards linked to the line of credit, so all or most of your employees will be able to access it.

How to Get a Business Line of Credit

Many businesses have a line of credit because they are a beneficial and flexible type of business financing. They’re beneficial, but how do you apply for a line of credit for your business?

First, you’ll need to have your credit statement and score handy. Just like applying for a personal credit card, most traditional lenders will require you to have a good credit score to obtain a business line of credit. With most traditional lenders, the higher your credit score, the better chance you’ll have to get a line of credit and a higher amount. 

You’ll also need some other documentation–have your financial and banking statements ready. When you’re researching business lines of credit, keep an eye out for fees and inquiries. Many credit issuers come with hidden fees and interest rates and be aware that merely applying can check your credit, possibly resulting in a ding to your score. 

Am I Ready for a Business Line of Credit? 

There’s no set answer for if your business is ready for a line of credit, but there are a few questions you can think through to decide. Does your business need a financial safety net? Do you need fast, flexible cash? If the answer to these questions is yes, your business could benefit from a credit line

Where Can I Get a Business Line of Credit?

First, do your research. Traditional banks may be tougher to approve you for a credit line and require a higher credit score, but they may offer better perks than online lenders.

Conversely, online lenders may be more lenient with finances, but they may offer you a smaller credit line or fewer perks. Whichever credit issuer you decide to pick, please be on the lookout and read between the lines for hidden fees and interest rates.

Even though a line of credit is fast and flexible, depending on your lender, there may be hidden costs, like high APR rates and late fees. 

Simplifying Finance with Fundid Capital

Fundid is a business finance platform whose mission is to help businesses grow. With Fundid Capital we offer many options for capital and financing, including lines of credit, and we work with you to find the best choice for your business. 

First, you’ll need to apply on our website. Have your business and financial statements ready–cash flow, tax returns, and revenue–as well as your credit score. When you have your documentation ready, submit them on our website; you’ll also be asked a few simple questions.

A Fundid Advisor will meet with you to review the options you’ve been approved for. They’ll discuss your business goals, and how each option can help meet those goals. You’ll then select the option that you think is the best fit, and once it’s approved, the money will be in your bank account in as little as twenty-four hours. Then you can put it to work the next day. 

How Fundid Capital is Different

Unlike many traditional banks and online lenders, Fundid Capital is very transparent and has your financial interests in mind. It’s completely free to apply–we don’t nickel and dime applicants with hidden application and service fees. And you won’t get any dings on your credit for applying. 

Our applicants often receive multiple different financial options, including but not limited to business lines of credit. We’re also a small business, so we understand firsthand how important having access to capital is to companies in their early stages. Access to capital is one of the biggest obstacles to business growth, and we are here to change that. We have a team of advisors who can empathize with being part of a small, growing business. They’re happy to guide you through the process of getting a business line of credit. 

Apply for a Business Line of Credit at Fundid Capital Today

We hope this article was valuable in explaining business lines of credit and what you can do to apply for one. If you’ve done your homework and decided a business line of credit is right for your business, apply for Fundid Capital today, and you’ll have options and advisors at your fingertips in no time. 

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About Fundid

Fundid is driven by a mission to empower business owners on their growth journeys by simplifying business finance & access to capital. 

We spend our time thinking about what the world would look like if the 80% of businesses that have under 10 employees had access to the capital they needed to grow and thrive. We're solving this with our Business Capital, Business-Building Card, and Resources that include our business Grant Match Program.

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