A business line of credit is an unsecured business line or revolving loan that allows the small business owner to borrow money for your business, with no collateral required. A business line of credit can is an alternative to bank loans, loans from the small business administration, or other types of financing.
Is a business line of credit an option for your small business if you require quick access to funds? Read below to understand better how a Sunwise Capital business line of credit works.
Small businesses must adapt to new situations in times of growth or irregular cash flow. A line of credit might be an ideal solution when you require quick access to cash and flexible terms for repaying borrowed funds.
You can access any amount of cash up to the predetermined credit limit from the LOC at any time. Think business credit card.
An open line of credit allows the borrower to take out the money as needed until you hit the credit limit, and as you pay back the money, you can reborrow again.
An agreement between a financial institution, typically major banks, community banks, commercial banks, and a consumer sets the maximum amount to the borrower.
As long as the borrower does not go over the agreed-upon maximum amount (or credit limit), they have unlimited access to the credit line.
If your company has short-term running expenses, including paying suppliers or meeting payroll, a business line of credit might help you get the money you need. You can borrow as much money as you need, up to the amount set by your credit card company.
Start-ups seeking funding have both obstacles and opportunities due to the coronavirus.
The obstacles include but are not limited to lack of financial statements (if necessary), business credit scores (lack of) and credit profile, and inability to meet basic eligibility requirements and qualification requirements.
Whether it’s revolving lines or non-revolving lines for the startup, access to credit is a challenge. Other business loan funding options are available to you.
When considering a company loan or line of credit, consider your specific situation. There are different types of loans, and make sure you find one that matches your needs.
A company loan or asset-based lending products might be an excellent option for anticipated expenditures, such as the purchase of new machinery.
If you have poor credit and don’t meet the credit qualifications but need additional l funds, consider another financing option.
Loans allow you to borrow all of the money at once and pay it back over some time.
Companies can use business lines of credit to pay for short-term business expenses that you expect to pay back in months or years. When revenue and expenditures are difficult to estimate, a company line of credit is a preferable option.
Remember that lines of credit are more likely to have variable interest rates, and if you fail to make a payment, your rate could go up. If you go with an internet lender instead of a traditional one, you may pay more.
Interest rates with online lenders can be higher than those at traditional banks or credit unions. However, there is no penalty for paying back the amount you owe early for many of these loans, which makes no difference whether you pay it back early or not.
In other words, “You’ll have to pay the interest in full.”
You get a decision in minutes, and the money might be yours within 24 hours with these alternative lenders.
A commercial line is a short-term loan that allows businesses to receive cash quickly. Commercial lines are typically for operating costs and payroll, rent, utilities, etc.
A secured line is a long-term loan that gives businesses access to funds to buy fixed assets. Sufficient collateral is required to secure these types of loans. Collateral includes business assets like accounts receivable, inventory, property, equipment, etc.
Revolving credit is a form of credit where you can pay off some of your debt periodically throughout a specified period. Typically, revolving credits give you better terms than regular loans, and you’ll get a low rate and flexible repayment options.
However, you may not qualify for all revolving credit programs. It’s best to check with your commercial banking rep or credit union for details.
Short Term & Long Term Loans
Commercial Lines and Secured Lines are both considered short term loans, while Revolving Credits are long term loans.
Short term loans require less collateral and offer higher amounts of borrowing power. They are ideal when significant capital needs arise in a quick span of time. Lenders prefer this option to lend capital to companies that don’t have enough collateral to secure the loan.
On the other hand, the long term nature of secured loans means a higher loan amount, as some lenders prefer to offer loans to companies with substantial collateral. Revolving cards allow large and small businesses to take advantage of lower interest rates and other favorable features.
When a company’s cash flow is tight, a business line of credit can come in handy. The LOC is one of the better cash flow management tools.
Keep in mind that during and post-pandemic, many lenders restrict access to company credit lines and reduce business financing options.
Traditional loans and other credit products, especially from a business bank, are increasingly challenging.
When they need extra cash, the coronavirus epidemic and general tough times trigger an unprecedented financial catastrophe for many small-business owners. Small-enterprise catastrophe funding, such as business lines of credit, is becoming more popular due to revenue losses and COVID-19 expenses.
At companies across America, a business credit line can be critical in helping them take advantage of an opportunity or weather an emergency. Using a line of credit limits your borrowing to the amount you need and charges interest only on that amount.
The line of credit can be a powerful asset for your company if you can get credit approval and manage its use correctly.
Yes! All businesses have access to small business funding; however, most companies require collateral to obtain a line of credit. Collateral provides security to protect lenders from unexpected losses when customers default on their obligations.
The amount of collateral required to provide adequate protection varies from lender to lender. An online lender is more likely to give you approval without collateral and lower annual revenue.
Small-business loans allow you to borrow money upfront and then pay it back, usually with interest.
You can acquire a business line of credit which is a more flexible source of capital. For several reasons, business lines of credit can be used, such as managing cash flow, purchasing merchandise, or meeting payroll.
Access to short-term capital is the most important reason for establishing a business line of credit. Supply and personnel costs, as well as inventory expansion, are two common uses for this cash.
An unsecured line of credit is a typical source of working capital for cyclical firms.
To better manage cash flow, many small businesses prefer to take up an unsecured credit line rather than take out a specific type of small business loan. If you have a business checking account or a small company credit card, you can generally use the line of credit.
Getting a line of credit for your small business without putting up collateral or personal assets is common practice (assets that the lender can sell if you default on the debt).
For amounts between $10,000 and $250,000, unsecured business lines of credit can have a variable or fixed interest rate.
Depending on the lender, a blanket lien on your assets (UCC) may be necessary.
Make sure you understand all of the business line of credit requirements before applying with any particular lender. Many traditional lenders and online lenders have time in business requirements and require the same business ownership over that period.
When compared to business credit cards, which can charge interest rates of up to 21% on purchases and even higher for cash advances, business line of credit rates is often cheaper.
Before submitting paperwork, make sure you meet the minimum credit score and check with the business credit bureaus to determine your business credit score. Don’t go through the application process until you meet the minimum credit score requirement if you have bad credit.
Sunwise Capital requires the following minimums and credit requirements to get started:
Sunwise Capital offers the following:
How Much Money Do You Need?
Once you complete our initial brief form, we’ll provide you with a one-page application to better get to know each other.
You’ll be advised of the following steps by our underwriter after we’ve analyzed your information.
Your LOC is Great For:
For sudden expenses, cash-flow needs, and major purchases, a line of credit allows you quick, easy access to your available funds.
Manage your cash flow with up to $250,000. Apply online with quick decisions and competitive rates with the option to lock in fixed annual percentage rates and flexible financing.
Use the money to fund new products, services, marketing campaigns, or anything else you need to grow your business. This form of financing offers the lowest rate and can fill in the gaps in cash flow. You’ll find this the perfect alternative to the traditional term loan.
As long as you make at least the required payments on time, you won’t incur any fees or penalties every week or month.
Once you get the approval for a credit line, you can request online access to funds immediately from your account. Hours later, your bank account will receive the money. Your bank account is automatically debited each week or month for the following six or twelve months.
Your credit line will renew as you pay down your debt. The line uses simple interest, so early repayment saves you money. In the event of early repayment, there are no prepayment penalties.
The approval process is easy with Sunwise Capital. We’ll review your information quickly and then contact you to discuss your approval amount.
If approved, you’ll get an offer within two days.
If you’re looking for a way to supplement your current cash flow and have healthy revenue, consider applying with Sunwise Capital.
With a Sunwise Capital Business Line of Credit, you can borrow up to $250,000 today.
Apply Online Today!