Business Line of Credit

Qualifying for a Line of Credit is not as difficult as you might think! Depending on the amount you are looking to secure, there are minimal criteria that you must meet (perfect credit not required!), including: You must have a personal credit score of at least 650 You must have established business credit Your business needs to have been operating for at least 2 years You need to have an average annual revenue of $180,000.

In most cases, there will be a hard credit pull performed when you apply for a line of credit to determine your credit limit, so just applying can have a short-term negative impact on your credit score. In addition, line of credit lenders typically report to the three major credit bureaus, which can help to increase your score when payments are made on time. Finally, the amount of your revolving credit line that you use at any given time can have an impact on your credit utilization ratio (similar to the way a credit card would), which does count for 30% of your credit score in the current models used by FICO.

A business line of credit works similarly to a credit card. You will be approved for a certain amount and you will be able to draw on and repay funds as many times as you wish, so long as you don’t exceed your credit limit.

Payment terms for a line of credit are very similar to those that you see with a credit card or other revolving credit options. You only pay the principal and interest on the part of the line that you’ve used. Once you’ve paid back what you’ve drawn, that amount is available for use again. Different from credit card payments, is that your payment schedule can be daily, weekly, or monthly (though, it usually falls under weekly or monthly payments), depending on the product you select.

Getting approved for a line of credit can be an extremely quick and painless process. As long as you have all your documentation ready to submit, you can get approved within 24 hours. Upon approval, you can expect to get access to your credit line, again, within 24 hours.

Overall, the size of your credit line is dependent on what you plan to use the funds for, and only you can determine this amount. However, it’s important to remember that the size of the line that you would like to get and what you are approved for may be very different. When determining your credit line size, several factors are considered, which can include: 1. Your revenue 2. Your time in business 3. Your business and personal credit scores 4. Your industry Lines of credit arranged through Kovo Capital can range from $10,000 to $250,000.

There are a few major differences between a business line of credit and a business credit card. For starters, a standard business credit card functions similarly to a personal credit card, in that you can’t just draw cash directly from the card account into your operating account to cover an expense (i.e. you can’t use a business credit card to cover your payroll). When it comes to credit limits and terms, business credit card approval is mostly based on your personal credit score. A line of credit, on the other hand, offers more flexibility on approval amounts, typically has lower interest rates, and can be used to pull cash into your operating account to cover operational expenses or address seasonal revenue shortages. There are, however, more defined terms on a line of credit. While a business credit card will continue to revolve so long as you make the minimum payment, a line of credit must be paid back within the amount of time agreed upon with your lender and expires after an agreed period. Both credit cards and lines of credit have a credit limit that can’t be exceeded. If you’re trying to decide between a business line of credit or a business credit card, think about what expenses you are looking to get covered. If the expenses require cash-on-hand, then a business line of credit would be a better option for you. However, if the expenses can be covered with credit, you may prefer to go with a credit card.