Applying for a Business Line of Credit Online? Here's How It Will Work

Business.com / Finance / Last Modified: April 21, 2017

Applying for a business line of credit online is unbelievably fast and painless, allowing you to get your business back on its feet quickly. That said, obtaining a business line of credit online comes with a few pros and cons—so let’s take a look at exactly how this borrowing option works.

When your business runs into a cash flow crisis, you don’t have time to wade through an extensive loan application or wait weeks for a lender’s approval. You need cash in hand right now to handle your business’s next oncoming expense—along with the flexibility to repay your debt on a schedule that works for you.

In this situation, there’s no better option for your business than applying for a business line of credit online. The process is unbelievably fast and painless, allowing you to get your business back on its feet quickly. That said, obtaining a business line of credit online comes with a few pros and cons—so let’s take a look at exactly how this borrowing option works.

What is a business line of credit?

Often touted as the most flexible form of business funding available, a business line of credit gives you a set amount of capital from which you can draw to meet almost any business need you can imagine. Once you’ve established the line of credit, you may draw on your line of credit as needed for any amount you wish and—here’s the best part—only actually pay for the amount of funding you use, while you’re actively using it.

That means if you obtain a $50,000 line of credit, but only withdraw $5,000 to cover your immediate cash flow emergency, you only have to pay interest on the $5,000. Having the additional cash available when you need it without paying interest on a huge loan you may or may not need is truly the best of both worlds.

Why apply for a business line of credit online?

Lines of credit have been available to business owners for a long time, but in the past, they were only offered through traditional banks who required extensive applications and an underwriting process that could drag on for months. For business owners who didn’t have the foresight to apply for a business line of credit before they needed emergency funding, the moment they hit a cash flow crisis was often too late to receive approval.

Fortunately, the online alternative lending market offers a much-needed solution to this problem. With unbeatable, simple online applications and lightning fast approval processes, certain online lenders can provide borrowers with cash in hand in as little as twenty-four hours—all while still offering the same incredible flexibility that traditional business lines of credit are known for.

Your fastest business line of credit options

Are you in a hurry to obtain flexible funding through an online business line of credit? Here’s what you need to know about applying for the fastest options available:

BlueVine

Boasting an application response time of under 24 hours, BlueVine offers business lines of credit on a 6-month term—repaid on a weekly payment schedule—with interest rates as low as 6.9 percent.

To qualify for a BlueVine Line of Credit, your business must be at least six months old with at least $10,000 per month in revenue, and you as the business owner must have a FICO personal credit score of 600 or above.

Borrowers can apply for a business line of credit from the BlueVine home page, either by connecting to your business’s QuickBooks Online account or by completing a simple starter form.

Kabbage

Offering business lines of credit between $2,000 and $100,000, Kabbage provides small business owners with flexible funding for a wide variety of business needs. To qualify, your business must be at least a year old and generate at least $50,000 in annual revenue.

One advantage of the Kabbage line of credit is the option of a 6- or 12-month payment schedule with easy to track monthly fees. And because there’s no penalty for paying back the loan early, you can use a Kabbage line of credit to cover a short-term funding need while keeping the option open to find a lower cost alternative down the line.

When you apply for Kabbage, you’ll be asked for basic identifying and contact information about you and your business, including the establishment date of your business, your federal tax ID number and the last four digits of your social security number. From there, you’ll have the option to link an accounting service like Quickbooks Online or Xero to securely provide your business financial data. After consenting to a personal credit check, you’ll have provided all you need to receive a quick notice of approval on your business line of credit from Kabbage.

Convenience at a cost

It’s clear that if you’re looking for quick and painless access to a flexible amount of working capital for your business, there’s nothing that fits the bill as perfectly as obtaining a business line of credit through an online alternative lender. That said, borrowers should keep in mind that this convenience comes at a cost.

Because these lines of credit are among the most expensive loan products on the market, using the funds without a clear endgame can cause a devastating blow to your business’s financial future. Before jumping to this option in a moment of panic, borrowers must make sure of the cost of borrowing and have a clear plan to make payments promptly.

If you’re considering applying for a business line of credit online, make sure you read the full terms of the loan before signing to understand the full terms of your liability and all fees associated with the line of credit—including prepayment penalties. Then, once you’ve made it through your cash flow emergency, either prioritize paying off borrowed funds as soon as possible or look into your options for refinancing this high-cost debt with an alternative loan at a lower interest rate.

As long as you use common sense and practice sound financial management, applying for a business line of credit online can provide a great financial tool to help your business overcome a controlled, short-term cash flow challenge. But if you’re not in an immediate rush for funding, taking the time to do some comparison shopping may lead you to find an equally flexible loan product and a much better interest rate.

Photo credit: Shutterstock / SFIO CRACHO

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