Business Line of Credit
Businesses don't always know exactly when they'll need additional capital. A business line of credit can provide qualifying businesses with access to capital that can be drawn as needed. Cash 4 Kings helps businesses nationwide explore potential options.
How It Works
Flexible Access to Capital
A business line of credit can provide access to a predetermined amount of capital. Unlike financing that provides one lump-sum amount, a line of credit may allow the business to draw funds when needed, up to its available credit limit. As funds are repaid, the business may potentially regain access to available credit depending on the structure of the credit facility.
For example, a business with a $50,000 approved limit that draws $10,000 has additional available credit remaining, subject to the terms of the agreement. The specific mechanics depend on the funding provider and financing structure.
Lump Sum
Business Loan
Typically appropriate for a defined expense such as purchasing equipment, renovating a property, buying a business or completing a major project.
Revolving Access
Business Line of Credit
Provides more flexible access to capital — useful for working capital, inventory, cash-flow gaps, unexpected expenses and short-term opportunities.
Neither option is automatically better. The appropriate structure depends on your business's needs, qualifications and intended use of capital.
Why Businesses Use It
When a Line of Credit Makes Sense
Manage Cash-Flow Gaps
Strong revenue doesn't prevent temporary shortages — a project may be completed today with payment 30 or 60 days out.
Purchase Inventory
Buy inventory before generating the revenue from selling it, with flexibility to draw only what's needed.
Handle Unexpected Expenses
Equipment breaks, vehicles need repairs, facilities need maintenance — a line of credit adds a buffer.
Take Advantage of Opportunities
Favorable supplier pricing or a large customer order doesn't always wait for a financing decision.
Secured
Backed by Collateral
May be backed by business assets or other eligible collateral. Because the lender has an interest in that collateral, terms and qualification requirements can differ.
Unsecured
No Specific Collateral
Doesn't generally require specific business assets, but providers may place greater emphasis on revenue, credit history, cash flow and time in business.
Qualification Factors
What Providers May Consider
Time in business, business revenue, cash flow, credit history, existing debt and bank activity. Requirements vary considerably by funding provider.
FAQ
Business Line of Credit FAQs
What is a business line of credit?
A business line of credit is a financing arrangement that can provide qualifying businesses with access to a predetermined amount of capital that may be drawn as needed, subject to the applicable terms.
How is a business line of credit different from a business loan?
A business loan generally provides a lump sum of capital, while a business line of credit may provide revolving access to capital that can be drawn as needed.
Can a new business get a line of credit?
Requirements vary by provider. New businesses may have fewer financial records available, so eligibility depends on factors such as revenue, credit profile, owner qualifications and the specific financing program.
Can I use a business line of credit for working capital?
Potentially. Depending on the financing terms, a business line of credit may be used for eligible working capital needs such as inventory, payroll, supplier payments and other operating expenses.
Is a business line of credit secured or unsecured?
It can be either. Some lines of credit may require collateral, while others may be unsecured. Requirements depend on the provider and financing program.
How much can I borrow with a business line of credit?
There is no standard amount. Potential credit limits depend on factors such as business revenue, cash flow, credit history, time in business and the applicable funding program.
Does a business line of credit build business credit?
It may, depending on the provider and whether the account is reported to applicable business credit bureaus. Businesses should confirm reporting practices with the provider.
Does Cash 4 Kings guarantee approval for a business line of credit?
No. Cash 4 Kings does not guarantee approval or funding. Funding decisions, terms and costs are determined by the applicable funding provider.