Line of Credit

Business
Get a Line of Credit
Line of Credit
Others
Payment
Rate
Business Line of Credit

A business line of credit is one of the best potential sources of finance available for entrepreneurs. Arranging a business line of credit can mark the difference between survival and success for a new venture.

A line of credit is a potential amount of money that a business can borrow from a lender. To get a line of credit a business signs an agreement with the lender. Under this agreement the business can borrow up to a certain amount of money from the lender.

Business lines of credit can be a valuable financing tool because they are source of money the business owner can tap into at any time. This can help the business pay for day to day operations or cover emergency expenses. Many businesses are only able to survive because they can get a line of credit.

Sources of Business Lines of Credit

Banks do make lines of credit available but they can be very restrictive. Many banks will only give lines of credit to businesses that run a lot of money through their accounts. Others will only loan money to businesses with good credit ratings. Getting a business line of credit from a bank can be very tough.

Internet lenders are often much easier to work with. They provide faster approval on business lines of credit and will be more likely to work with new businesses, speculative businesses and businesses with bad credit ratings. Internet lenders often charge higher rates of interest.

Private equity lenders will provide lines of credit if businesses put up collateral such as real estate equity, inventory, equipment or accounts receivable. To get a line of credit from a private equity lender, a business will need collateral.

Many vendors and suppliers will give business lines of credit to their customers. In most cases these lines of credit will involve inventory or supplies advanced without payment. Some vendors and suppliers may also provide financing through lines of credit as well.

Qualifying for a Business Line of Credit

To qualify for a bank line of credit most businesses will have to have a good credit rating. Most banks will also require a business to open an account and keep a certain amount of money in the account to get a line of credit.

Internet lenders will provide business lines of credit at a higher interest rate if the business can demonstrate that has cash flow or income. These internet lenders may give those with good credit better interest rates.

To qualify for a private equity line of credit a business will have to prove that it has equity. The equity can take the form of real estate, inventory, equipment or accounts receivable. Real estate equity loans are usually the easiest to get. Businesses with good credit will usually get a better interest rate on private equity lines of credit.

Finding a Business Line of Credit

The best place to find a business line of credit is online. Online lenders usually have the best interest rates and the most flexible lines of credit. Online lenders are also more likely to advance lines of credit to startup businesses, speculative businesses and businesses with bad credit.