Business Line of Credit
A small business line of credit can help a company get through unexpected expenses, purchase more inventory or materials, and expand quicker. Line of credit loans are a fantastic way to borrow funds because the business owner can draw money out as needed. A commercial line of credit provides financial freedom by providing unrestricted cash, so the business can easily fill its needs.
QUICK FACTS AND REQUIREMENTS
Time to Funds
BENEFITS & DRAWBACKS
- Interest is paid solely on funds drawn
- Credit when you need it
- Fits all business types and industries
- May require collateral
- Interest rates are correlated with credit score
- Personal guarantee required
What is a Business Line of Credit
A small business or startup business line of credit is a way for companies to increase their budget quickly to satisfy their growing needs. Loan amounts can vary from $5,000 to $500,000 at an interest rate between 8% and 24%. It normally takes one or two weeks to get access to the funds, and the loan term reaches maturity at one to two years. Borrowed money is repaid monthly.
How Does a Line of Credit Work?
A business line of credit operates somewhat similarly to a personal credit card. A company borrows money and pays for only what it uses. Interest only accrues on the funds that are pulled out of the line of credit, and there is no time limit on when those funds can be used.
This unrestricted flexibility extends to the use of the funds as well. A small business can use the money as needed. Interest rates are related to a business’ credit rating, and collateral may be required if a business lacks great credit, or requires a large loan. The line of credit is backed by a personal guarantee by the borrower.
Benefits of a Business Line of Credit
We understand that you know your business better than anyone else, so at AMP Advance, we never try to tell you how you can use your funds. Loans revolve and refresh, so any payments on principal made by the small business get added back to the available balance of the credit line.
The flexibility, good rates, and lack of restrictions make it a good solution for any type of business, regardless of its industry. Any business with a history of paying debts can use a line of credit to get through temporary cash droughts.
Line of Credit vs. Credit Card
While there are some similarities between a line of credit and a credit card, there are also some major and important differences. Line of credit loans help you avoid credit card fees, and the rates are also much better for a business line of credit.
The line of credit helps save a business money because there are no fixed payments, and all interest is flexible and often based on the market. There is no way for a business to recover the funds it loses by starting a credit card, so the best course of action is to avoid those fees and high rates whenever possible.
How to Get a Line of Credit
At Amp Advance, we suggest that small business owners get a good understanding of how to acquire a business line of credit. This will make it far easier to ensure your company receives the best deal possible because you will know what to expect.
The most important factor that helps a small business qualify for a line of credit is its credit score. A small business should have a credit score of 560 or greater to apply for a business line of credit because it can be difficult to qualify with anything less.
A lender may also want to see an active business checking account, and some general financial information. Small business owners should be willing to provide answers about how long they have been operating and what kind of revenue they achieve.
Most lenders will ask general questions about why the business owner needs a line of credit and their plans to use it. A business’ line of credit will depend on multiple factors including its credit score, the amount of credit desired, and current interest rates.
One constant when it comes to business lines of credit is that the best opportunities come from trustworthy and reliable lenders. Amp Advance is a respected source for direct funding based out of Miami. Our reputation and relentless dedication to our business partners has made us leaders for small business financing.
The Best Business Line of Credit
If you have any further questions about how to establish a commercial line of credit, contact Amp Advance. Our team of honest, world-class professionals will get you the information and fair rates you need.
Once you understand what to expect from a line of credit, the next step is to start your application. We take pride in offering accessible web-based financing solutions and affordable options for small businesses.
If a line of credit is the best solution for your specific financial needs, don’t hesitate to contact us today. Take immediate action to see why we are a trusted source of credit for companies nationwide.
Who is AMP Advance?
AMP Advance is a Miami based industry leading direct funding source out of Coconut Grove, Florida. We help those who are in need of small business financing by providing web based financing options & funding solutions. Our solutions assist small business owners find matching opportunities while assisting small business owners improve their overall financial situations. AMP Advance provides small business loans, business lines of credit, accounts receivables financing, equipment financing, unsecured business loans, and revenue based loans to millions of small business owners nationwide.