How Long Does It Take to Get a Business Line of Credit

(April 2024)

How Long Does It Take to Get a Business Line of Credit

In This Article

Thinking of getting a business line of credit to finance your business but don’t know how long it’s going to take? Worry less! You are in the right place.

If you are a business owner struggling with bills or lost out on a chance to expand your business due to lack of funding, you are well aware of how stressful cash flow issues can be.

When you need additional working capital to pay regular business expenses or cover cash flow gaps, a business line of credit is the ideal financing choice. Read this article to know how long it takes to get a business line of credit

To Know How Long It Takes to Get a Business Line of Credit:

1. Understand What Business Line of Credit Is
2. Know General Factors That Impact Business Line of Credit Approval
3. Know Timing Factors for Business Line of Credit Approval

  • Secured Business Line of Credit
  • Unsecured Business Line of Credit

4. Know How Long It Takes to Get a Business Line of Credit
Banks

  • Credit Unions
  • Alternative Lenders

5. Plan for a Fast Business Line of Credit Approval
6. Find and Compare Lenders Who Quickly Approve Business Lines of Credit
7. Check Your Eligibility for a Fast Business Line of Credit Approval
8. Get Your Application Paperwork Ready
9. Apply for a Business Line of Credit
10.Have a Backup Plan in Case the Lender Denies Your Application

Here we go!

1. Understand What Business Line of Credit Is

To know how long it takes to get a business line of credit, understand what a business line of credit is.

Like a credit card, a business line of credit lets you take out loans up to a predetermined amount and just pay interest on the money you borrow. After paying back the money, you can keep using the credit line as long as the lender so allows.

Your account will have a maximum credit limit if approved. Then, using your credit limit, you can take out a single loan or a series of loans, only paying interest on the amount you borrow.

2. What Are Good vs Bad Credit Scores?

To obtain a business line of credit, comprehend the general factors that impact a business line of credit.

Analyze the following factors to understand the impact on your business line of credit:

Business Credit History: Your business’s credit history and credit score play a crucial role in determining the amount of line of credit available to you and the interest rate your business will be charged.

Financial Stability: Your lender will examine your business’s financial stability—including its revenue, profit margins and debt-to-income ratio—to determine your creditworthiness.

Time in Business: Established businesses with a longer history are generally more attractive to lenders and may be offered more favorable terms.

Business Size: The size of your business and the amount of revenue it generates will be taken into account when determining the line of credit amount.

Collateral: Your lender may require collateral, such as equipment or real estate, to secure the loan.

3. Know Timing Factors for Business Line of Credit Approval

To apply for business line of credit, be knowledgeable about the timing factors for business line of credit approval.

When it comes to timing for approval of a business line of credit, both secured and unsecured options have certain factors that can impact the approval process.

For Secured Business Line of Credit

Consider the time it takes to prepare and provide collateral, such as property, inventory, or accounts receivable, as a security for the loan. The lender must appraise the collateral to determine its value, which can take some time. Review the terms and conditions of the secured business line of credit and the time it takes to get back to the lender with any questions or concerns.

For Unsecured Business Line of Credit

Review your credit history and financial statements to ensure they are up-to-date and accurate. Check the time it takes to gather all the necessary documentation, such as tax returns, bank statements, and business licenses. Take note of the lender’s review process, as some lenders may take longer than others to make a decision.

Keep in mind that each lender may have different timing factors that impact approval, so make sure to understand the specific requirements of the lender to whom you are applying.

4. Know How Long It Takes to Get a Business Line of Credit

To get a business line of credit, know the time span required to get a business line of credit.

Discover the approval process for a business line of credit with different types of lenders:

  • Banks
  • Credit Unions
  • Alternative Lenders

For Banks

Anticipate a longer approval process, potentially taking several weeks or even months. Prepare to furnish detailed financial information, including tax returns and financial statements, and a solid business plan to receive approval.

For Credit Unions

You may experience a faster approval process, ranging from a few days to several weeks. However, remember that credit unions only serve members, so first, you must join the credit union.

For Alternative Lenders

Enjoy a swift approval process, often within a few days, due to lighter credit checks and less documentation needed. Bear in mind that alternative lenders may charge higher interest rates or fees compared to banks and credit unions.

Remember that your credit score, business revenue, and time in operation also influence the approval process for a business line of credit. Thoroughly research and compare options to find the best match for your business needs.

5. Plan for a Fast Business Line of Credit Approval

To obtain a business line of credit, plan for a fast business line of credit approval.

To plan for a fast business line of credit approval, follow these steps:

Review Your Credit Score

Take control of your credit score by obtaining a copy of your credit report and correcting any errors. A good credit score can improve your chances of getting approved for a business line of credit.

Gather Financial Documents

Prepare financial statements, tax returns, and other documentation that lenders may require. Make sure they are up-to-date and accurately reflect the financial health of your business.

Choose The Right Lender

Research different lenders, including banks, credit unions, and alternative lenders, to find the best option for your business. Compare interest rates, fees, and repayment terms to find the lender that offers the most favorable terms.

Know Your Revenue

Know the amount of revenue your business generates and the rate at which it is growing. This information can help you qualify for a larger line of credit.

Have a Clear Business Plan

Lenders want to know how you plan to use the funds from your business line of credit and how you plan to repay it. Have a clear and detailed business plan in place to show them your commitment to success.

6. Find and Compare Lenders Who Quickly Approve Business Lines of Credit

To get a business line of credit approval on time, research and weigh lenders who quickly approve business line of credit.

Compare these quick-approval lenders for your business line of credit:

Kabbage: Kabbage offers small business loans with quick online application. Expect approval in 10 minutes and funds available within 24 hours.

OnDeck: OnDeck provides financial products, including lines of credit, with quick evaluation and approval process. Receive funds within 24 hours.

BlueVine: BlueVine gives small businesses a line of credit through simple online application. Get approval in 10 minutes and access funds within 24 hours.

Fundbox: Fundbox evaluates creditworthiness using technology and offers lines of credit to small businesses. Approval takes only a few minutes, and funds become available in a few hours.

When comparing, consider the interest rate, fees, repayment terms, and maximum amount for each option. Also, evaluate the time it takes to receive funds and any other requirements.

7. Check Your Eligibility for a Fast Business Line of Credit Approval

To obtain a business line of credit, check your eligibility; verifying the credentials of your business is important. You can save time and work by knowing where your business stands in advance (i.e., before evaluating possibilities and filling out applications).

Consider the following standard parameters to assess your business’ prospects:

Personal Credit Score

Your personal credit score should be the first thing you check; the lender considers your personal credit score when you apply for a business line of credit. You are more likely to get an approval for a business line of credit with the best rates and terms if your personal credit score is better.

Consider the following standard parameters to assess your business’ prospects:

Annual Revenue

To qualify for a business line of credit, your lenders will implement a minimum requirement for annual revenue that a business needs to meet. Keep in mind that lenders pay close attention to your annual sales, they see it as one of the most crucial metrics when evaluating your business.

Business History

When assessing your requirements to obtain a business line of credit, you should also take your experience in the industry into account. To successfully apply for a business line of credit, keep in mind to inform lenders about how long your business is in operation. If your business is relatively new—say, between 3 and 12 months old—consider seeking funding from online lenders, as they tend to be more willing to take on the risk of lending to newer businesses.

8. Get Your Application Paperwork Ready

To receive a business line of credit, gather the required documents to prepare for the formal application process once you identify your preferred lender.

Include the following:

  • Personal and Business Tax Returns
  • Business Licenses
  • Articles of Incorporation
  • Personal and Business Bank Statements
  • Financial Statements
  • Business Plan
  • Building Lease

9. Apply for a Business Line of Credit

To get a business line of credit, submit your application.

Complete your application by submitting it online or in person. Be aware that the time it takes for a lender to review your application and make a decision varies. Remember that your lender may ask for additional documentation after they review your application.

Gather the following information when submitting your application to your lender:

  • Your name
  • Business name
  • Desired loan amount
  • Loan purpose
  • Business Tax ID
  • Annual revenue
  • Social Security number (SSN)

10.Have a Backup Plan in Case the Lender Denies Your Application

To obtain a business line of credit, consider a backup plan.

To have a backup plan in case your lender denies your application for a business line of credit, follow these steps:

  • Contact the lender and ask for an explanation of the denial.
  • Focus on improving your credit score by paying bills on time and paying down debt.
  • Find a co-signer who has a good credit score.
  • Look into alternative lenders if traditional lenders deny your application.
  • Consider alternative funding options, such as grants, crowdfunding, or personal loans from friends and family.

By taking these steps, you can ensure that you have a backup plan in case your lender denies your application for a business line of credit.

Conclusion

To get a business line of credit on time, familiarize yourself with business line of credit, know the general factors that impact business line of credit approval, know the timing factors for business line of credit approval, know the duration required to get a business line of credit and plan for a fast business line of credit approval.

Research and weigh lenders who approve business line of credit on time, verify your eligibility, gather your paperwork, submit your application for a business line of credit and have a backup plan in case the lender denies your application.

That’s it!

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