6 Best Line of Credit Loans for Your Small Business

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6 BEST LINE OF CREDIT LOANS FOR YOUR SMALL
BUSINESS
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Every startup and small business requires working
capital to survive and thrive. They say variety
is the spice of life, and getting a business loan
is spicy too. There can be so many reasons why
you need a loan for your small businessfrom
buying new equipment to meeting payroll or
expanding to new location. The best thing is
there are different loan options available for
your financial needs.
However, theres no versatile option to fund your
business growth especially when it comes to
business lines of credit, awkwardly. In order to
secure the best credit line, youll have to make
several applications with different lenders to
get the best and affordable loan deal with lower
interest rate and desirable repayment terms.
If you need flexible funding for your small
business, a line of credit is the best option.
Heres is everything you need to know about what
types of lines of credit available, how it works,
and how to choose the best one.
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The Benefits
LINE OF CREDIT THE OVERVIEW

• You can get instant access to capital to manage
  any emergency expenses
• Line of credit loans dont require you to go
  through a tedious loan application process.
• This is best for seasonal businesses were you
  could take out as much or as little as you
  require
• Most line of credit loans are unsecured in nature
  with amounts under 100,000. Such credit lines
  act as startup business loans where you dont
  have to provide any collateral or place burden on
  your businesss financials.
• Its a quick and easy way to secure working
  capital with no-strings-attached backup.
• Less interest payment than with a credit card.
• These can be secured as well based on different
  factors. Being credit scores the primary measure
  of creditworthiness you can get a revolving line
  of credit at lower interest rate by submitting a
  business plan or collateral.

Generally, lines of credit are revolving credit
lines where you draw cash as and when needed and
repay it. It is used for operational purposes and
the drawn amount fluctuates every month based on
your cash flow needs.
Line of credit loans differ from term loans where
you get a lump sum in your bank account, and
repay it over a predetermined period. You can use
a line of credit loan for almost any purpose
including major upgrades, marketing, or
operational costs. The best part is youll only
pay interest on the amount you draw without
having to worry about investing full amount into
a highly profitable endeavor.
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Short-Term Line of Credit Loans
6 Best Line Of Credit Loans for Small, Medium
Large Businesses
Medium-Term Line of Credit Loans
Bank Line of Credit Loans
Collateral Based Line of Credit Loans
Invoice-Backed Line of Credit Loans
Business Credit Cards
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The terms of line of credit loans differ from the
term loans. A short-term line of credit loan is
similar to a short-term loan and takes into
account the qualification factors such as loan
amount, interest rate and APR, credit score
requirements, and revenue requirements. The
short-term line of credit is easily accessible to
borrowers with lower credit scores and annual
revenues, and tend to have higher APRs. However,
getting a short-term loan is easier to qualify
and quicker to receive. Startups and new
businesses can have the financial assurance with
flexible revolving line of credit.
Short-Term Line of Credit Loans
OnDeck Capital and Fundbox are the best
short-term line of credit lenders.
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Likewise, medium-term line of credit loans is
alike medium-term loans where you can draw more
funds and pay less due to lower APRs. Such loans
are also help cover inventory costs, repairs
costs, payroll and bills, and to bridge gaps
between payments and expenses. Even though the
short-term line of credit loans and medium-term
line of credit loans function the same way but
pretty much are different products. Only
borrowers with good credit scores and higher
annual revenue are able to for medium-term line
of credit loans. The loan process is longer from
receiving the cash to being approved, and
collecting the paperwork for applicationbecause
lenders want to know youre capable to manage the
money.
Medium-Term Line of Credit Loans
Kabbage and Lending Club are two best lenders of
medium-term line of credit loans.
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Apart from alternative lenders, banks are the
prime source of capital for most businessesif
you can qualify. Banks line of credit loans offer
the lowest interest rates and highest loan
amounts. However, qualifying funding from banks
is very challenging and difficult. According to a
study, 4 out of every 5 borrowers get declined
for a business loan application. Moreover, the
underwriting process is longerso even if you
qualify for line of credit loans, you have to
wait longer to get your hands on the cash.
Even with a line of credit, this proves you
shouldnt wait to apply for a loan until you
really need it. Actually, this is applicable in
terms of a line of credit loan, since theres no
trouble to secure one early on. While some
lenders charge maintenance fees if you dont make
the withdrawals, but thats easily avoided and
worth the risk.
Bank Line of Credit Loans
Chase Bank, Wells Fargo, and Bank of America are
the best lenders for bank line of credit loans.
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Collateral Based Line of Credit Loans
For asset-based lenders, the eligibility criteria
includes borrowers business history and
borrowing habits to conclude your
creditworthiness. They use borrowers past
information to determine the future of their
investmentthats because they dont have
collateral against the loan. Asset-based lenders
depend heavily on your future projections. This
is because the financing is tied to collateral,
theyre counting on that collateral will help you
repay your loan. Lenders that offer collateral
based line of credit loans will typically put a
lien on the assetto put it simply, theyll claim
ownership over the collateral if you cant repay
them. The most common types of collateral used in
asset-based lending includes accounts receivable,
inventory, machinery and equipment, real estate
and other tangible assets.
It is important to get funding only for the right
investment (smart spending). If you obtain a loan
just to manage payroll, youll end up spending
the payroll with the loans interest without any
returns. But, if you secure funding to buy a new
equipment, the hope is that the added equipment
will cover the loan costs in the end.
InterNex Capital and Balboa Capital are the best
lenders for collateral-based line of credit loans.
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In invoice-backed line of credit loan, you
provide your eligible accounts receivable and A/R
aging to lenders that are used to calculate line
of credit maximumusually about 80-85 of your
invoices. The payments on those invoices
deposited into the bank account managed by the
lender to pay off the line of credit.
Additionally, if you dont have any funds drawn,
the funds redirected to your business. The best
part is it effectively repay your invoices
instantly, allowing you to use funds as and when
needed. Also, with an invoice-backed line of
credit loans, your credit maximum will grow based
on your weekly accounts receivable updates. You
can borrow more based on more invoices youre
expectinghelping you manage your cash flow and
business debts.
Invoice-Backed Line of Credit Loans
Invoice-backed line of credit loans work similar
to an asset-based line of credit where the lender
uses your accounts receivable as collateral to
create a line of credit loan.
DealStruck and CrestMark provide the best
invoice-backed line of credit loans.
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Business Credit Cards
A business credit card is another important
financing option to build your credit score with
the speed, flexibility, and no collateral
requirements. Moreover, there are 0 introductory
APRs business credit cards to help you spend cash
without any interest until a predetermined
period. Apart from 0 introductory APRs, business
credit cards offer several other benefits
including speedy funding without the need to wait
for approval, flexibility in the use, no
collateral requirements, and points and rewards
like free flights, complimentary accommodation,
discounted meals, no foreign transaction fees and
much more!
For many, there is a confusion between a line of
credit and a credit card. A business credit card
works similar to a line of credit and theyre
portable, physical lines of credit.
Chase, American Express. Capital One and Discover
are among the top business credit card providers.
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The Bottom line
Now that you know the six best line of credit
loans available to you, you can make the smart
choices for financing. You can apply for line of
credit loans even before you need it, so you can
have the cash when you really need it without
worrying about your cash flow. Understanding your
credit requirements will surely help you
represents as a solid candidate when you
apply. Before you apply for a line of credit
loans, shop around for terms, and compare factors
such as credit limit, interest rate, repayment
period, annual review and renewal, eligibility
requirements, and any special benefits or rewards
before signing on the dotted line.