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Business Line of Credit Reviews

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  • Lendio Review

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    Pros Relaxed credit score requirements 2-7 days time to funding Cons Opaque terms and fees (partners) Overview In the interest of clarity, let’s get this out of the way first: Lendio does not originate business loans. Rather, this service operates more like a business funding matchmaker. Lendio is a business financing platform that matches customers […]

  • 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 small business lender. Founded back in 2007, OnDeck became one of the first lenders to rely primarily on technology to make their […]

  • 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 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 has […]

  • 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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    BlueVine, an online lending service, was founded in 2013 after the founder watched his father, a physical therapist, struggle with inconsistent cash flow due to slow payouts by insurance companies. It shouldn’t come as a surprise, then, that the company offers a number of services intended to help merchants overcome cash flow problems.

  • Fundbox Review

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    Pros Relaxed borrower qualifications 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 (a product similar to invoice factoring). More recently, Fundbox has […]

  • 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 […]

  • 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 a lender that offers lines of credit to eligible businesses. Finding a lender more convenient than Kabbage would be difficult. In most cases, business owners can apply, get a […]

  • 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 based in Chicago. 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 […]

  • Reliant Funding Review

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    Pros No credit rating requirements Good public reputation Cons Opaque terms and fees Some additional fees Overview Reliant Funding is a San Diego-based alternative business funder whose recent acquisitions include Merchants Capital Access.  It’s part of a growing industry that provides merchant cash advances (MCAs) rather than traditional lending products like bank loans. MCAs superficially resemble […]

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. Check out our article to find the best business line of credit provider for your enterprise. 

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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