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When you run your own business, you never know when unexpected expenses will crop up. You need the flexibility to manage cash flow during slow times or take advantage of fleeting opportunities. A business line of credit can fill the gaps. In this article, you’ll learn about different online line of credit loans so you can decide if they’re a good fit for you.
What is a line of credit loan?
A business line of credit loan is a flexible loan that allows you to access money as you need it, up to a set amount. It’s similar to a credit card in that you don’t have to take the full amount, and you can borrow again as you pay it back. Unlike a personal or business loan, you don’t have fixed payments on a line of credit. Your payment amount will depend on how much you’ve borrowed.
You wouldn’t normally take out a line of credit to buy a car or for other one-time expenses that can be easily financed. Instead, you’d use a line of credit to cover shortfalls in your operating costs or other expenses that aren’t easily financed.
Most business lines of credit include a draw period, often 12 to 24 months, but sometimes longer. After this draw period, you no longer have access to the funds and need to pay off the outstanding amount.
Can you apply for a line of credit online?
Absolutely, you can apply for a line of credit online. Gone are the days when you had to pick out a nice outfit and trudge downtown to meet with a banker to get a loan. Thanks to digital transformation, you can handle everything from the application to making payments from your computer or mobile device.
Almost all banks provide an online portal for you to apply for a line of credit or sign up for other banking services. You'll have to provide documentation, such as your driver’s license or financial statements. You can often submit these online, but some banks may require a hard copy.
4 Online line of credit loans
Many banks offer online line of credit loans. Each one will have its own terms and conditions, so read them closely to decide which works for you. Here are four of the best online options.
Wells Fargo offers three options for business lines of credit. If you’ve been in business for less than two years, you may qualify for the Small Business Advantage Line of Credit. You can receive between $5,000 and $50,000 in revolving credit at interest rates as low as prime plus 4.5%. If you’ve been in business for over two years, you may qualify for the BusinessLine line of credit. You can access between $10,000 to $150,000 at interest rates as low as prime plus 1.75%.
You’ll need at least a 680 credit score to qualify for a line of credit from Wells Fargo, so it’s not ideal for everyone. Wells Fargo asks for your phone number during your online application, so you may have to talk to a human during the process. And you might want to look elsewhere if you need quick access to funds because the vetting process is extensive. It may take one to two weeks to complete your application.
OnDeck’s business line of credit provides between $6,000 and $100,000. Your interest rate will depend on factors such as your credit score, how long you’ve been in business, and your annual revenue. OnDeck’s requirements are less stringent than Wells Fargo's. You may be able to qualify with a credit score of 625 and one year in business. You need an annual revenue of at least $100,000 and a business checking account.
Another advantage of OnDeck is they use a soft pull to check your credit score, so it won’t lower your credit score to see if you qualify. Once approved, you’ll have instant access to your funds.
If your annual revenue is lower than $100,000, you should check out Headway Capital. Its annual revenue requirement is only $50,000, which is more realistic for new businesses. Headway Capital offers an instant line of credit online, once you’re approved, of between $5,000 and $100,000. They offer flexible repayment terms of 12, 18, or 24 months, and you can choose to pay weekly or monthly.
Like OnDeck, they do a soft pull to check your credit. If your credit score is less than stellar, Headway Capital may be a good option. They don’t list a firm credit score requirement and state they consider more than just your credit score in your application.
BlueVine offers a business line of credit of up to $250,000. However, you’ll need a fairly impressive $40,000 monthly revenue stream to qualify. You need at least two years of business history and a minimum credit score of 625. Your business structure has to be a corporation or an LLC, so sole proprietors and general partners needn’t apply.
BlueVine doesn’t offer funding in Nevada, South Dakota, or North Dakota, and you must be in good standing with your state’s secretary of state. They’ll check your eligibility monthly for as long as you have the line of credit open.
On the positive side, if you qualify, you can get approved in as little as five minutes, and you’ll have access to your funds within hours.
How to choose which online line of credit works best for you
As you can see, the terms for a business line of credit can vary widely. When you’re considering which is best for you, think about the following factors:
There’s no point in applying for a line of credit if you don’t meet the minimum qualifications. At best, it’s a waste of your time. At worst, it could lower your credit score. Most financial institutions list qualifying requirements directly on the website, so check before you start an application. Traditional lenders, such as big banks, usually have higher qualifying thresholds than online lenders.
You’ll have more options if you’ve been in business longer, have a higher credit score, and have higher annual revenue. However, even if your business is new or you have a lower credit score, you’ll still have options.
Consider how much money you need before you apply. For most lenders, you’ll need to be in business longer or have a higher annual revenue to qualify for larger lines of credit. However, you may not need a huge line of credit if you’re just looking for a cushion for operating expenses or want to build your business credit score.
A traditional bank will generally take longer to provide access to funds than an online bank. If you need to cover an unexpected expense quickly, look for a lender that provides quick access to your funds.
A business line of credit can be a life-saver when you’re facing a cash flow emergency. There are lines of credit to suit almost every business, but be sure to check out the terms and conditions for each one closely. If you need fast funding, you can explore other options, such as Novo Funding. Novo offers up to $75,000 of flexible working capital to meet your company’s short-term needs. Apply today for a quick response and instant access to funds.
Novo Platform Inc. strives to provide accurate information but cannot guarantee that this content is correct, complete, or up-to-date. This page is for informational purposes only and is not financial or legal advice nor an endorsement of any third-party products or services. All products and services are presented without warranty. Novo Platform Inc. does not provide any financial or legal advice, and you should consult your own financial, legal, or tax advisors.
Merchant Cash Advance products and services are offered by Novo Funding LLC (“Novo Funding”), a wholly owned subsidiary of Novo. Merchant Cash Advances require a Novo checking account.
Novo is a fintech, not a bank. Banking services provided by Middlesex Federal Savings, F.A.: Member FDIC.
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