Business Line of Credit
A revolving line of credit provides a flexible option for business capital, giving you access to funds when you need them and only charging for what you use.
What is a business line of credit?
A business line of credit is a flexible business loan that allows you to borrow up to a certain amount, or credit limit, to cover short-term working capital requirements.
When you get a business line of credit, the lender approves you to borrow up to a certain amount of money and you’re able to access some or all of that money as you need it.
After you fully pay off a portion you’ve used, the full amount of your line of credit is available for you to use again.
Although business lines of credit do operate very similarly to a credit card, they are not the same thing. Credit cards typically have higher interest rates and in many cases, a line of credit does not have a mandatory monthly payment system.
Which business is ideal for this type of small business financing?
For many businesses, a line of credit is the go-to solution for stabilizing cash flows as borrowers can secure access to funds and then draw at a later time when additional working capital is needed. It’s also a great option for those who need to remain adaptable. After all, small business owners often have a limited window of time to seize the opportunity when it arises. A line of credit allows you to quickly access the funding you need to pursue the initiative.
Because you only pay for what you use, lines of credit are also great emergency funds. That said, a line of credit would not be the right option in certain scenarios, such as trying to open a startup. This is because the total cost of capital is typically lower with a term loan.
Line of Credit vs. Term Loan
BUSINESS LINE OF CREDIT
Lines of credit, on the other hand, provide a revolving account that allows borrowers to draw up to a certain loan amount, repay the amount borrowed, and redraw up to the amount of the credit limit to receive additional funds. Unlike keeping up with the fixed payments of a term loan, you will be required to pay interest on borrowed balance while the credit line remains open.
TERM LOAN
Term loans provide a specific sum of money that is repaid over a fixed period of time, otherwise known as the loan term. In many cases line of credit, borrowers are required to meet a minimum monthly payment to avoid additional fees or penalties. Some lines of credit are open-ended; the line does not close after a certain period of time as it does with a term loan. Others may close or become inactive after a certain amount of time or period of inactivity.
Advantages
Lines of credit, on the other hand, provide a revolving account that allows borrowers to draw up to a certain loan amount, repay the amount borrowed, and redraw up to the amount of the credit limit to receive additional funds. Unlike keeping up with the fixed payments of a term loan, you will be required to pay interest on borrowed balance while the credit line remains open.
Disadvantages
Term loans provide a specific sum of money that is repaid over a fixed period of time, otherwise known as the loan term. In many cases line of credit, borrowers are required to meet a minimum monthly payment to avoid additional fees or penalties. Some lines of credit are open-ended; the line does not close after a certain period of time as it does with a term loan. Others may close or become inactive after a certain amount of time or period of inactivity.
Our 3 Step Process
Prequalify Online
To get prequalified, follow the "Apply Now" button and submit some basic business information.
Get Approved
After your submission has been processed by the underwriting team, we will reach out to discuss the options you qualify for.
Get Funded
Upon approval and accepting the offer, funds are deposited directly into your business bank account so you can use the money immediately.
Qualifying Criteria
Approval for loans from EJN Financial isn’t based on your credit score alone.
We focus on the overall health of your business.
