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Business Line of Credit Reviews

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  • Fundation Review

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    Pros Competitive terms and fees Few additional fees Typical time to funding: 2 – 7 days No prepayment penalty Excellent customer support Cons Stringent borrower qualifications Somewhat lengthy application process Unsuited for startups Overview Fundation is a business lender that offers installment loans and lines of credit to qualified borrowers. The company was founded in 2011 and […]

  • StreetShares Review

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    Pros Relaxed borrower qualifications Competitive terms and fees Easy application process Typical time to funding: 2 – 7 days No prepayment penalties Excellent customer service Cons Unsuited for large businesses Overview StreetShares is a peer-to-peer (P2P) lender that offers business installment loans, lines of credit and, most recently, contract financing (a service similar to invoice factoring). This lender was founded […]

  • BlueVine Review

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    Pros Suited to small businesses Relaxed borrower qualifications Competitive terms and fees Short application process Typical time to funding: 2 – 7 days Excellent customer support Cons Potentially expensive terms and fees Line of credit unsuited for large businesses Overview BlueVine, an online lending service, was founded in 2013 after the founder watched his father, […]

  • OnDeck Review

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    Pros Relaxed borrower qualifications Relaxed credit score requirements Competitive terms and fees Short application process Excellent customer support Prepayment discounts Cons Potentially high factor rates Opaque advertising Overview OnDeck is a hugely prolific online lender. Founded back in 2007, OnDeck became one of the first lenders to rely primarily on technology to make their lending decisions. With […]

  • P2Binvestor Review

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    Pros Suited for large B2B businesses No credit score requirements Competitive terms and fees No draw fee Easy application process Cons Unsuited for B2C businesses Possible early termination fee Overview P2Binvestor, known as P2Bi for short, is a peer-to-peer lender that offers asset-backed lines of credit to qualified B2B businesses. The company was founded in […]

  • Fundbox Review

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    Pros Suited for startups Relaxed borrower qualifications No credit score requirements No draw fee No additional fees Short application process Cons Potentially high terms and fees Unsuited for large businesses Overview Fundbox is a business lender that specializes in offering financial products to small businesses. Founded in 2013, the company originally offered an invoice financing product […]

  • Kabbage Review

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    Pros Suited for small businesses Relaxed borrower qualifications No additional fees Fast application process Cons Unsuited for startups Potentially high APRs Overview Founded in 2009, Kabbage is an online lender that offers lines of credit to eligible businesses. Originally, the company only worked with online retailers, but they’ve expanded their reach to service brick-and-mortar businesses as well. Finding […]

  • Dealstruck Review

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    Note: Dealstruck is no longer originating new loans (though they are continuing to service borrowers who already have a loan). For lenders similar to Dealstruck, take a look at StreetShares or Fundation. Highlights Mid-prime business lender Term loans Working capital loans Asset based lines of credit Inventory lines of credit Competitive rates and fees Excellent customer […]

  • Rapid Advance Review

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    Pros Low factor rates Low origination fees Cons Some additional fees Limited support materials Overview Rapid Advance is a Maryland-based non-traditional small business funder. It offers merchant cash advances (MCAs) and short-term business loans to small businesses seeking short-term funding. Unlike many of its competitors, it offers a number of variations on the typical MCA, leading […]

  • Headway Capital Review

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    Pros No credit score requirements Suitable for small business Cons High APR Some additional fees Overview Headway Capital is part of Enova International, a financial services company. The parent company owns a number of lending services around the world, including two others in the United States: CashNetUSA, a payday lending service, and Net Credit, a personal […]

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What is a Line of Credit?

A line of credit is a business financing arrangement between a funder and a business. Much like a credit card, a line of credit provides businesses with a maximum borrowing amount. The business can draw up to the maximum amount at any time, and it only pays interest and fees on the amount borrowed.

Credit lines are often called revolving lines of credit because, when your outstanding debt is paid down, you will be able to borrow from the full amount again.

For example, you might have a line of credit with a maximum limit of $100,000. You borrow $10,000 and have a repayment term length of six months. At this point, you have access to $90,000. In two months, you borrow another $30,000, so your credit line is down to $60,000 and you have $40,000 in debt (minus what you have already paid). When you repay the money you owe, you will have access to the full $100,000 again.

Some lines of credit are not backed by collateral (or, at least, not specific collateral). However, a common type of line of credit is an asset-backed line of credit. These lines are backed by forms of business revenue such as invoices, inventory, and monthly recurring revenue. The maximum available credit normally corresponds to the value of your assets. Because your loan is backed by collateral, these types of credit lines normally carry lower fees than credit lines that aren’t backed by collateral.

Lines of credit are available from a number of different sources, including online lenders and banks.

Who Should Use a Line of Credit?

Because you do not need to reapply every time you need funds, a line of credit can be useful for a number of scenarios. If your business is in any of these situations, you may want to consider getting a credit line:

  • Your business has inconsistent cash flow
  • You frequently need cash to capitalize on unexpected opportunities
  • You need additional capital, but you don’t know exactly how much
  • You want a financial safety net just in case the need arises
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