Applying for a business line of credit can be one of the wisest decisions that you make for your business. Maintaining a comfortable flow of business capital will probably be the most repetitive stress that you will face as a business owner. At any given moment, you will always be in one of two situations – either you need more money or you are trying to be frugal to budget the money you already have generating into the business – if not both. To ensure that cash flow is never jeopardized and production is never slowed down, many business owners are applying for a business line of credit to keep production afloat at all times.

What is a Business Credit Line?

line-of-creditAt Empower Lend, we emphasize and encourage business owners to educate themselves on the ins and outs of business funding. Understanding how a business credit line works can make applying for a business line of credit a much smoother process in the long run.

Becoming one of the most popular forms of business capital funding, a business line of credit is a revolving credit line that acts much like a secondary bank account for business owners. A form of alternative business lending, a credit line gives you access to an approved loan amount, let’s say $250,000 to utilize as needed for your business. The business owner would then only be responsible to repay the amount of money drawn from the credit line, rather than interest on the full amount they have access to.

Much like a credit card, once a payment is made towards the balance drawn from the credit line, the funds return to the available balance for continued use. Are you starting to see why applying for a business line of credit can be advantageous?

A business line of credit is convenient for any business owner since the funds can be used as needed and unrestricted on expenses such as the purchase of inventory or equipment, daily expenses, payroll or even project management.

Business Line of Credit Application Tips

Get your application in early! Lenders already have a long list of factors that they use for the approval process – why wait until you need funding the most to start the application? Completing the business credit line application process as early as possible can ensure that you have access to funding when you need to access the funding!

Shop around! Business credit lines are flexible and not hard to come by, so don’t be afraid to shop around before committing. Be cautious of elements such as hidden fees and unnecessary expenses. 

Submit a Complete & Accurate Application – Take your time with your application, there’s no need to rush through such an important business decision! To ensure optimal focus and budgeting, it is highly recommended to apply for a business credit line with one lender at a time.

Business Credit Line Information Prep

Getting the basic information needed when applying for a business line of credit is much easier than you think – especially when applying for a business line of credit online. While each lender may have their own individual requirements for the application process, you can generally expect to need the following information to complete the application efficiently:

  • Personal information such as contact information, Social Security Number, address and financial informatiline-of-crediton
  • Business information such as location, contact information, owners, Tax ID and corporate documents
  • Business bank statements and tax documents
  • Information on the services or products sold
  • Time in business
  • Recent credit card processing statements

For businesses that operate with multiple owners, it is highly recommended to gather the above-mentioned information for each owner listed with a financial interest in the business.

Be Honest. Be Eligible. Get Funded.

The most effective way to get a business credit line with the best terms starts with a full application. This shows the lender exactly why your business a good investment. Prepping to complete an application for business funding is the easy part – showcasing the integrity of your business on paper is where the fun happens!

Business lenders understand that every business has their shortcomings. How that business navigates through obstacles and over hurdles can show a lender the determination and mindset of your business. Most credit line lenders prefer to lend to businesses that have been operating for more than two years, mainly to ensure that the business has been seasoned enough to work out the startup kinks. While you may not be making millions of dollars yet, at this point you will want to convey consistency to the lender – shown through your monthly revenue deposits.

The average small business with under 10 employees generates a minimum of $9,500 – $15,000 in revenue per month during their third year in business. Calculating your monthly revenue and analyzing the patterns of your bank deposits can give you great insight as to which business funding product can best suit your business goals. Perhaps a merchant cash advance would accommodate your business model better than a business line of credit?

Ready to test some figures? Give our free business loan calculator a whirl – CLICK HERE!