- Common Misconceptions About Business Lines of Credit – Many business owners don’t realize they qualify and instead settle for higher-cost financing options.
- General Requirements for Approval – Banks typically require a FICO score of 600-700, proof of business profitability, and at least 1-2 years in business.
- No Collateral Needed for Unsecured Lines – Unlike traditional loans, unsecured business lines of credit don’t require collateral, making them more accessible for small businesses.
A revolving line of credit is among one of the top sought after financial products available to small businesses. There are some misconceptions about a line of credit from would-be applicants. Most often, applicants don’t know they can be approved and actually settle for more expensive, subpar small business debt. For example, did you know that you don’t need collateral for an unsecured line of credit? There are ways to get real bank lines of credit for your small business.
Although the actual requirements differ from bank to bank, there are some general minimums requirements for a bank line of credit. Some things need to be in order before you apply for a small business line of credit. Here are some:
Personal FICO score
As with mostly bank debt products, a minimum credit score is required for approval. This minimum FICO score requirement ranges from 600 to 700.
Business Profitability
Unlike a bank issued credit card, the bank wants to make sure that a business will repay an unsecured line of credit. One way for the bank to determine the creditworthiness of the business is to look at past tax returns or financials, to see if the business declared profits or losses.
Time in Business
A business that has been in business for less than 1 year, has a high statistical chance of going out of business by year number 2. A business that has been in business for more than a couple years, has a greater likelihood of staying in business in the years to come, especially if the business is profitable.
To see the specific qualifications for a line of credit in your State, please apply or visit our quick requirement checker.
