Apply for a Business Line of Credit

How to Apply for a Business Line of Credit

Business line of credit qualifications

If a business line of credit sounds great for your company — there are a few qualifications you need to meet in order to apply. Below are some of the common items you might need when applying for a business line of credit:

  • Personal credit score
  • Bank account information
  • Personal and business tax returns
  • Business financial statements
  • Information identifying your business — for example, an Employer Identification Number (EIN)

Mistakes to avoid when applying for a business line of credit

  • Not having a clear vision of what the funds will be used for – Before applying to a business line of credit, sit down and determine what you’ll use the money for. Having a long-term vision for your business contributes to providers looking on your company more favorably when deciding your credit limit.
  • Applying for a line of credit when you’re desperate – Rule of thumb is to apply for a line of credit before you need it. If you apply when your business is growing and you have positive cash flow, you’re more likely to receive financing when the lending firm reviews your financial statements.
  • Rushing through the application – It’s important the application is filled out properly. Simple mistakes, such as entering an incorrect identification number, can cause problems. Take your time on the application and be sure to leave contact information — either a phone number or email address — so the bank or lending company can reach you with questions.

Can You Get a Business Line of Credit with Bad Credit?

What is a credit score?

A credit score is the assumed risk a lender adopts when you borrow money from them. This number is calculated by looking at your loan and credit card payment history, length of credit history, types of credit, and total amount owed.

Credit scores range from 0 to 100. And, while the guidelines for a good or bad credit score vary by lender, some ranges are used to evaluate whether or not your credit score is in a good place.

  • Dun & Bradstreet measures a company’s risk using a Paydex score, ranging from zero to 100
  • Like the Paydex score, Equifax’s “payment index,” measured on a scale of zero to 100
  • Ranging from zero to 100, Experian business credit scores are different from Dun & Bradstreet’s Paydex score and Equifax’s payment index because they take into account multiple factors, not just payment histories.

Will a bad credit score prevent me from securing a line of business credit?

No, but it might be more difficult to obtain a line of credit with an affordable credit limit and interest rate. Luckily, there are ways to improve your credit and providers that work with a variety of different business types and credit situations.

5 Providers for a Business Line of Credit

1. Fundbox

Best for: Businesses that have been open 3+ months. One perk of Fundbox is there are no minimum credit score requirements.
Borrowing limit: Up to $100,000

2. On Deck

Best for: Businesses that need quick access to funds. You can be approved for a business line of credit in as little as 24 hours, but it often takes a few days.
Borrowing limit: Up to $100,000

3. Kabbage

Best for: Businesses with fair to bad credit. There are no minimum credit score requirements and you can get a line of credit quickly — but they will charge higher rates as a result.
Borrowing limit: Up to $250,000

4. BlueVine

Best for: A range of businesses, including those with bad credit. With a quick application process, you can be approved in as little as 12 hours.
Borrowing limit: Up to $250,000

5. Wells Fargo

Best for: Established businesses with good credit. They offer both unsecured and secured business lines of credit.
Borrowing limit: Up to $500,000

A business line of credit is a fantastic way to begin building your business credit and securing funds for your operations.