Looking to have access to capital on a need-be basis?
Lines of credit for your small business that can make your capital work just as hard as you do. And with access to a small business line of credit, you can help grow, expand and upgrade any facet of your small business whenever you need.
Follow along as we go through the ins and outs of small business financing through business lines of credit, and learn new ways for you to help capitalize on working capital.
What is a small business line of credit?
A line of credit is a flexible funding option that allows small businesses— like you — to access capital on a need-be basis. Your small business will go through an approval process to discover how much working capital is available to finance, and then allows you to draw out funds as needed. This option allows you the flexibility to access capital when it’s necessary, leaving you without the need to pay back a lump sum all at once.
How does a small business line of credit work?
Like most small business owners, there are a lot of backend processes that need to take place in order to fully expand and grow. One of which is saving enough profit to grow to your true potential. But for most small business owners, an excess of working capital can be hard to come by — especially if you’re only a few years in to your business endeavor.
But that’s why small business financing exists. With a line of credit, you’re able to help finance the upfront costs of new customer acquisition, growth, expansion, technology upgrades or payroll amounts, on a need-be basis. This allows you to budget out your expenses so that you’re only financing when necessary.
How it can help grow your business
Although a business line of credit offers small business financing, you’re offered more flexibility with credit amounts on a line of credit than on other traditional forms of lending.
For instance, a small business line of credit allows you to dip into your financing approval amount to cover expenses when needed. Whereas a term loan is a traditional form of lending deposits with a one-time sum of cash into your business bank account and offers varying repayment and fees based on your business qualifications. Although term loans seem like a surefire way to access funding, it’s important to understand that they often require more stringent requirements and could potentially lead to higher rates.
Looking into other financing options, like a business credit card, can offer the same style of flexibility that a line of credit offers, but often will require that applicants have higher requirements for small business owners to be approved. Business credit cards can lead to potentially high rates if those requirements are insufficient, with the small business owner left to foot a lofty bill at the end of the day.
And while both term loans and business credit cards are common practice amongst business owners — big and small — being able to understand these differences is of utmost importance when you’re considering funding for working capital in your small business.
That’s why a line of credit might be the way to go when it comes down to which financing option is your best option. It offers term options from 3–18 months, flexible payments, and a fixed fee charge based on your withdrawal from your line of credit account. Business lines of credit are ideal for repeat cash flow needs, and is a great option for obtaining working capital to pay for unexpected expenses or exciting new business opportunities.
The only things to be watchful over when dealing with a small business line of credit is that they can lead to lower financing availability based on your qualifications. But if you have any questions regarding a small business line of credit, you can always reach out to a specialized business advisor to discuss which financing options are best for you.
Ways to use your small business line of credit funds
When considering opening a small business line of credit, you should first identify what you’re going to be using the financing toward. It’s a quintessential step in understanding how much you can afford to pay back, and what is most important to put on a financed amount of capital.
And to help with identifying your business’ financing needs, here are the most common ways that business lines of credit are used for:
Ongoing operating expenses
Covering cash flow gaps
Pursuing a growth or expansion opportunity
Upgrading your business’ equipment
Covering seasonal downturns
Making advances in your business’ technology
Financing an unexpected expense
All of these are common practice amongst small business owners, but can provide clarity as to what you and your business might be looking to finance.
Who qualifies for a business line of credit
Being a small business owner can be stressful, especially when it comes to discovering what kinds of financing options are available to you. But if you’re looking to be considered for a line of credit, you’ll need to:
- Provide a valid form of identification
- Have a business bank account
- Provide your last three months of business bank statements
While most people are unsure of whether or not they qualify for a line of credit, you should understand that marketplace funders are prepared to help find a solution for you and your small business. Knowing your business’ prior history, understanding your credit history, and being able to prove that you’re able to pay back financing over time are just a few ways that can help you be approved for funding in a short amount of time.
How to apply for a small business line of credit
Now, more than ever, marketplace funders — like Rapid Finance — are offering quick and convenient ways to access business lines of credit through a short application process. To get started in the process, you’ll need to:
- Apply online: You can apply online from anywhere, and on most devices. Just click the GET QUOTE button on the top of our page and let us know more information about your company and its goals, and remember to collect any necessary documentation.
- Let us review: Our team will review all the information provided to us. If we need any additional information, our team of business advisors will reach out to let you know.
- Get funded: If approved for a business line of credit, our team will proceed to send out the approved initial draw to your business bank account.
- Obtain additional funds: Because of the flexibility of a business line of credit, you’ll be able to come back and draw out of your line of credit up to the approved amount at any time. Just be sure to note the fees and terms associated with your financing amount.
A small business line of credit offers the utmost flexibility when it comes to financing options. And we’re making it easier than ever to have access to working capital through more ways than ever — making your entrepreneurial endeavors that much more exciting and achievable. So, if you’re looking for flexibility within your financing options, the ability to draw out capital when needed, and set interest and fees, a business line of credit might be the best option for you.
If you have any questions regarding a small business line of credit, feel free to reach out to one of our highly skilled business advisors at Rapid Finance, today: (877)-252-0827.