How to Get Approved for a Business Life of Credit

Restaurant Business Loans

Every company needs a business line of credit. It allows business owners to borrow up to a certain amount of cash for any expenses related to their business operations. 

For example, let’s say you have an emergency where you run out of inventory and have to purchase more items from your supplier very quickly. You could use your business line of credit to purchase the inventory, instead of waiting until you have the right amount of revenue to do it. You simply pay back the borrowed money as you start selling off the new inventory and watch the return on your investment come in.

Don’t confuse a business line of credit with a business loan. They are two different things. With a business loan, you receive the full loan amount in one lump sum. Because you receive all the money at once, you’re required to pay monthly premiums plus interest to service the loan.

On the other hand, a business line of credit is a cash reserve that’s available to you on demand. You only have to pay monthly premiums (plus interest) on the money you’ve drawn from the line of credit, not on the entire line of credit. The total line of credit you can be approved for depends on the size, age, and monthly revenue of your business. You may be approved for between $25,000 and $50,000, $50,000 and $100,000, $100,000 and $500,000, or $1 million and over.

New businesses won’t need a huge line of credit. In fact, business loans are more appropriate for new businesses with a lot of startup expenses. Business lines of credit are meant for existing businesses. They’re not meant to fund startup costs.

A lot of business owners prefer to have a business line of credit, because they only have to pay off what they spend and nothing more. This keeps their monthly premiums low and their total debt much more manageable. There are no monthly maintenance fees, new account fees, prepayment fees, closure fees, or any other fees. The only extra expense is interest, whose rates start at 4.8%.

How to Get Approved

Globelend Capital offers a fast and dependable revolving line of credit to business owners. Since it is revolving, the money you borrow will be reimbursed back to your credit line as you make payments.

For example, if you have a business line of credit of $25,000 and you borrow $5,000 from it, you’ll have $20,000 of credit left. But you only have to pay back $5,000. If you were to pay back $1,000 of that $5,000, your total available credit would be $21,000. Every dollar you pay back is a dollar added back to the credit line.

There are several requirements that you must satisfy before you can qualify for a business line of credit. They are as follows:

  • You must provide general information about the nature of your business.
  • Your business must earn at least $10,000 in revenue each month.
  • Your business must be at least 6 months old.
  • You need a FICO score of at least 600.
  • You must provide bank statements for the previous 3 months.

Based on this information, we’ll crunch the numbers and see how much credit you qualify for. If it’s in the ballpark of the credit amount you have requested, your application will be approved. If you’re asking for more credit than what you qualify for, your request will be denied. One of our credit agents will call you to see if something else can be worked out.

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