Short answer: A business line of credit gives you a borrowing limit. You draw money when you need it, pay it back, and that amount becomes available again. It works a lot like a credit card for your business, but with cash wired to your bank account instead of a card.
The basics
When you’re approved for a line of credit, you get a limit, for example $100,000. You don’t receive that money all at once. Instead, you draw what you need, when you need it.
Say you draw $20,000 to cover payroll during a slow month. You now have $80,000 still available. As you pay back the $20,000, your available amount goes back up. That’s what “revolving” means.
What it’s good for
Lines of credit work best for costs that come and go:
- Payroll when customers pay late
- Inventory and materials ahead of a busy season
- Repairs and equipment that can’t wait
- Covering the gap between finishing a job and getting paid
If you need one large sum for a single purchase you’ll pay off over years, a term loan may fit better. Many owners use both.
What it costs
Costs vary by funder and by your business’s qualifications. The important thing is to understand exactly what you’ll pay before you sign: the total cost of what you draw, the payment amount and how often payments are made. A good funding advisor will walk you through those numbers in plain language.
Want to see what your business qualifies for? Answer a few quick questions or call (888) 707-0202.
What you need to qualify
Requirements differ between funders. At Flex Credit Capital, we generally look for:
- At least 6 months in business
- About $15,000 or more in monthly revenue
- A business bank account with recent statements
We don’t require collateral, and we look at how your business is actually doing, not only your credit score.
How fast you can get money
Banks can take weeks. Alternative funders can move much faster. Once you’re approved with us and your agreement is signed, funds can be wired the same day.
The bottom line
A business line of credit is flexible money you can reach for when timing gets tight. Draw only what you need, pay it down, and it’s there again the next time.
