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How to Apply for a Business Line of Credit


When starting up a new business, many people will want a business line of credit to finance their new ventures. Why? A business line of credit will protect the business owner's personal credit rating score. Business credit scores and personal credit scores are considered separately. In many cases, the amount of credit for which you can apply in a business line of credit will also be higher.

Nationwide and Regional Banks

There are several ways to apply for a business line of credit, including reaching out to large banking institutions. Many will offer a small business line of credit up to $100,000 or more. This is a good route to take if you have been in business for at least two years and have a proven track record.

What can you do with this line of credit? You can use to expand your growing business, use it for an emergency associated with your business, or use it for any business-related expenditure. You typically get the line of credit in the form of a credit card or checks.

This is an unsecured line of credit; you don't need any upfront collateral. You can apply by visiting a nearby branch. Typically, you will have a reply within 10 business days. Both your business and personal credit will be evaluated to see if you are eligible.

Credit Card Companies

Credit card companies also offer opportunities to obtain a business line of credit. You apply for the credit line in the same way that you would apply for a regular credit card. You can even apply online. You should expect that your personal credit rating to be considered, along with your business credit rating.

Local Banking Institutions

You can also go to your local bank to apply for a business line of credit. Some banks offer personalized services as an incentive to apply. When you go to your bank, make sure that you have all of your business documentation together. You will need tax returns, records, and a personal financial statement. Any business partner that owns at least 25% of the business must also sign the application.

Online Resources

There are also many websites and companies that claim to offer lines of credit. However, ensure that these are legitimate before proceeding. If you have any reservations, it may be best to go with a more established company. Companies offering "to good to be true" programs may end up charging higher interest rates, requiring personal collateral, or simply be outright scams. Remember that old saying about things that sound too good to be true; generally they are.

After you have received your credit line, be sure to pay your bills on time so as not to incur any late fees, over-limit fees, or anything else that will drop your credit rating. Ultimately, this will help you when applying for any future credit needs.

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