Business Line of Credit
QUICK FACTS AND REQUIREMENTS
7.99% – 24%
6 months to 1 Year
Weekly or Monthly
- 6 months in business
- 620+ FICO
- Min. $200k annual sales
- No adult or vice industry business
Benefits & Drawbacks
Higher credit qualifications (620+ FICO)
What is a Business Line of Credit
A small business line of credit is a way for companies to increase their budget quickly to satisfy their growing needs. Loan amounts can vary from $5,000 to $250,000 at an interest rate between 7.99% and 24%. It normally takes one or 3 days to get access to the funds, and the loan term reaches maturity at 6 months to 1 year. Borrowed money is repaid weekly or monthly.
How Does a Line of Credit Work?
A business line of credit operates somewhat similarly to a personal credit card. A company borrows money and pays for only what it uses. Interest only accrues on the funds that are pulled out of the line of credit, and there is no time limit on when those funds can be used.
This unrestricted flexibility extends to the use of the funds as well. A small business can use the money as needed. Interest rates are related to a business’ credit rating, and collateral may be required if a business lacks great credit, or requires a large loan. The line of credit is backed by a personal guarantee by the borrower.
Benefits of a Business Line of Credit
We understand that you know your business better than anyone else, so at AMP Advance, we never try to tell you how you can use your funds. Loans revolve and refresh, so any payments on principal made by the small business get added back to the available balance of the credit line.
The flexibility, good rates, and lack of restrictions make it a good solution for any type of business, regardless of its industry. Any business that needs short term capital can use a line of credit to get through temporary cash droughts.
Line of Credit vs. Credit Card
While there are some similarities between a line of credit and a credit card, there are also some major and important differences. Line of credits typically offer a larger dollar amount than a personal credit card, is unsecured and often is less expensive in terms of overall costs vs a personal credit card.
Lets look below for more comparisons:
- Some credit cards will offer rewards programs that lines of credit do not, however they come with annual fees.
- Line of credits costs are typically lower and have higher credit limits than credit cards.
- If you need a large amount in cash, getting a cash advances with a credit card can get very expensive—with fees of up to 3% of the amount of cash you withdraw!
How to Get a Line of Credit
At AMP Advance, we suggest that small business owners get a good understanding of how to acquire a business line of credit. This will make it far easier to ensure your company receives the best deal possible because you will know what to expect.
The most important factor that helps a small business qualify for a line of credit is its credit score. The applicant should have a credit score of 620 or greater to apply because it can be difficult to qualify with anything less.
A lender may also want to see an active business checking account and several months of financial statements along with some general business information. Small business owners should be willing to provide answers about how long they have been operating and what kind of revenue they achieve.
The Best Business Line of Credit
If you have any further questions about how to establish a commercial line of credit, contact AMP Advance. Our team of honest, world-class professionals will get you the information and fair rates you need.
Once you understand what to expect from a line of credit, the next step is to start your application. We take pride in offering accessible web-based financing solutions and affordable options for small businesses.
One constant when it comes to business lines of credit is that the best opportunities come from trustworthy and reliable lenders. AMP Advance is a respected source for direct funding based out of Miami. Our reputation and relentless dedication to our business partners has made us leaders for small business financing. Take action to see why we are a trusted source of credit for companies nationwide. Click below see if your small business can qualify.