A business line of credit is one of the most flexible ways to keep cash on hand. You get a set limit, draw only what you need, and pay interest only on what you draw. But before a lender opens a line for you, they want to know your business can handle it. Here is what lenders usually look at, and how to get ready before you apply.
What a lender wants to see
Every lender has its own rules, but most look at the same handful of things. They want a picture of how steady your business is and how it handles money. At Line of Credit LOC, we compare your application against the programs our lending partners offer, and these are the basics that come up again and again.
Time in business. Lenders like to see a track record. Most of our lending partners look for at least one year in business. A newer company may still have options, but a full year of history makes the conversation much easier.
Annual revenue. Your revenue shows a lender how much your business can comfortably repay. Our minimum is $50,000 in annual business revenue. Higher, steadier revenue generally supports a higher credit limit.
Personal credit score. For small businesses, the owner’s credit still matters. Most applicants we can help have a personal FICO score of 625 or higher.
A business checking account. Funds from a line of credit are deposited into your business account, and lenders often review that account’s activity. Keeping business and personal money separate also makes your finances easier to read.
You can see all of these in one place on our eligibility page.
Get your paperwork in order
Being organized before you apply can save time once a lender starts reviewing your file. Requirements vary by lender, but it helps to have these handy:
- Recent business bank statements
- Basic business details: legal name, address, entity type and tax ID
- A rough idea of your annual revenue
- Owner information and an estimate of your credit score
If a lender asks for something more, such as tax returns or financial statements, a funding advisor will let you know.
Clean up your bank account
Lenders often read your bank statements closely. A few habits can make your account look healthier:
- Avoid overdrafts and returned payments. Frequent negative balances can be a red flag.
- Keep deposits regular. Steady deposits show steady business.
- Run business spending through the business account. Mixed personal and business spending makes your revenue harder to read.
None of this has to be perfect. It simply helps a lender see your business clearly.
Know your credit before you apply
It is worth checking your personal credit report before applying so nothing surprises you. If you spot an error, you can dispute it with the credit bureau. Paying bills on time and keeping credit card balances low can also help over time.
Worried about applying hurting your score? Many of our lending partners check eligibility with a soft credit pull, which doesn’t affect your credit score. Some lenders may run a full credit check before final approval, and we will tell you when that’s the case.
Decide how much you really need
Our lending partners offer credit lines up to $1,000,000, but the right limit depends on your business. Think about what you would actually use the line for: covering payroll during a slow month, buying inventory before a busy season, or bridging slow-paying invoices. Asking for a limit that matches your revenue and your real needs makes your request easier for a lender to say yes to.
Also think about repayment. Terms usually run 12 to 36 months, with weekly or monthly payments on the amount you’ve drawn. Pick a schedule that lines up with how money comes into your business.
What if you don’t meet every requirement?
Meeting the minimums doesn’t guarantee approval, and missing one doesn’t always end the conversation. Each lender makes its own decision. If you’re close, for example a little under a year in business, it can still be worth talking with a funding advisor about what your options are now and what would help later.
If you would rather not pledge property or equipment, read about how an unsecured business line of credit works. You can also compare the line of credit options we help business owners explore.
Ready to see where you stand?
You can apply in minutes. A Line of Credit LOC funding advisor reviews your details and walks you through the options our lending partners may be able to offer. Apply now to get started.
FAQ
What credit score do I need for a business line of credit?
Most applicants we can help have a personal FICO score of 625 or higher. Each lender sets its own requirements, so your full profile matters too, including time in business and revenue.
Can I qualify if my business is less than a year old?
Most of our lending partners look for at least one year in business. If you are close, a funding advisor can tell you whether any options fit your business today.
Will checking my eligibility hurt my credit?
Usually not. Many of our lending partners check eligibility with a soft credit pull, which doesn’t affect your credit score. Some may run a full credit check before final approval.