What is a business line of credit and how does it work?
A business line of credit is a type of funding that allows you to borrow from a set amount of money. You’re given a credit limit, and within it you can draw what you need, when you need it. You only pay interest and fees on what you borrow.
Compared to a term loan, a business line of credit is typically used to cover recurring business expenses or bridge cash flow gaps. With Inspire, you replenish your available funds as you repay what you borrow. This is known as a revolving business line of credit. To help you build your credit history, we report your payment history to the business credit bureaus.
Funding made simple
Business funding that moves at your speed.
Step 1
Complete the application.
Our streamlined process is designed to be completed in just minutes.
Step 2
Get a decision.
Work with an expert loan advisor to choose the best option for you.
Step 3
Receive your funds.
Sign your contract and get funds as soon as the same day.
A line of credit for businesses is not the easiest form of funding to get. You’ll want to have a credit score of 560 when applying because most lenders will look for that as a minimum. You’ll also want to have at least six months in business, and a minimum of $50,000 in annual revenue. If you’re looking for a secured line of credit, you’ll need to have some collateral to offer too. That might help you get better terms for your line of credit.
Monthly and weekly repayment programs are available. The payments will be automatically debited from your bank account. As long as you keep sufficient funds in your bank, your payments will process without you needing to worry about anything.
You don’t need collateral for a business line of credit. You could get an unsecured line of credit that does not require collateral. But it could cost you more. With unsecured lines of credit, the interest rates can be higher because lenders are taking a larger risk in lending to you.
We would hate to see you go but if you must, there is no termination fee charged. As long as there is no outstanding balance, you can stop using your line a credit at any point with no penalties and no fees.
Only pay interest on the funds you use
One of the coolest things about a business line of credit is that you only pay interest on the funds you use, not the full amount. For example, if you’re approved for a $40,000 business line of credit and you use $20,000 for office upgrades, you’ll just pay interest on that $20,000. This could save you a bundle in interest.
Business line of credit best uses
Just like with a credit card, you can use a business credit line for just about anything. It’s good for businesses looking to expand and in need of a little cash to set up a new location, or to buy inventory. It can also be great to have on deck in the event you might need funds unexpectedly. Or it can be good if you expect to experience cash flow issues due to an off-season or something of the like.