A business line of credit (LOC) is a good option if you need short-term working capital, to purchase additional inventory, or assistance with payroll. The advantage of a business line of credit is the flexibility. You can request a maximum amount to borrow and only spend what you need. The benefit is you only have to pay interest on the amount you spend, not on the entire line of credit. You can also adjust your repayment schedule as needed based on your budget or cash flow. The repayment options allow you to pay the entire balance at once or make the minimum monthly payments. Business lines of credit are also typically unsecured debt, which means you don’t have to provide collateral or assets.

What do financial lenders look for?

Lenders may require bank statements, personal tax returns, business tax returns, business registration documents, and proof of profitability for 2 out of the last 3 years of business. They may also request a UCC-1 (Uniform Commercial Code-1) financial statement, which is a legal form that a creditor files to give notice that it has an interest in the personal property of a debtor.

Borrower loan tips:

• Be sure to have proof of profitability for at least 2 years.

• We suggest you manage the line of credit like a credit card, and only use the funds when necessary or the lender may reduce or terminate the line of credit.

• Check your monthly payments with our Business Loan calculator.