Business Line of Credit Requirements: What Lenders Look For

A business line of credit works like a credit card for your company: you're approved for a limit, draw what you need, and pay interest only on the amount you've drawn. As you repay, that credit becomes available again. It's well suited to uneven cash flow, seasonal inventory, and unexpected expenses.

Typical requirements

Criteria vary by lender, but most evaluate:

• Time in business: many lenders want at least one to two years. Some online lenders accept less.
• Annual revenue: lenders set minimums that scale with the size of the line
• Credit: both your personal score and your business credit history
• Cash flow: consistent deposits that show you can handle repayments
• Existing debt: how much of your cash flow is already committed to other payments

Secured vs. unsecured lines

A secured line is backed by collateral such as receivables, inventory or equipment. It's usually easier to qualify for and can come with a higher limit. An unsecured line has no specific collateral, but lenders generally ask for stronger credit and revenue, and a personal guarantee is common either way.

Costs to compare

• Interest rate on drawn balances, and whether it's fixed or variable
• Draw fees, annual or maintenance fees, and any origination fee
• The draw period, and how the line renews or converts to repayment

How to strengthen your application

• Link your business bank account so lenders can verify your cash flow directly
• Keep personal credit card balances low before applying
• Apply before you urgently need the money: lines are easiest to get when the business is doing well

GoSwiftFund connects businesses with commercial loan and line of credit partners for $100,000 to $500,000.