Unsecured Business Line of Credit Basics

An unsecured business line of credit can be a convenient way for an established small business to access capital. In some cases, newer small businesses can take advantage of lines of credit, too. If you’re looking for capital to cover short-term needs at your business, get in touch with Legendary Capital Solutions to discover if a line of credit is the right option for you.

What is a business line of credit?

A business line of credit is a financing option for small businesses. Funds from a line of credit can be used toward many short-term expenses, including payroll, new equipment, payments to suppliers, and other expenses.

Think of a business line of credit like a credit card. Your lender sets a limit on the total amount you can borrow over a period of time. Then, you use the funds whenever they are needed through the term of the line of the credit. Lenders charge a financing fee based on the outstanding balance of the line of credit. Most lenders ask for funds to be repaid in full after a year or so.

Business lines of credit make it easy for companies to access the cash they need, when they need it, even in an emergency situation. Repaying a line of credit can be more affordable than other lending options. However, lines of credit can be more difficult to qualify for, especially for newer businesses.

What makes a line of credit unsecured?

Lines of credit can be secured or unsecured. With an unsecured business line of credit, the borrower is not required to put up a specific type of collateral, such as machinery, cash, or real estate, to back the loan. Instead, the line of credit is issued based on the borrower’s personal guarantee or by the borrower’s company. This means the lender can sue a borrower in the event the borrower defaults on the loan.

How do I qualify for an unsecured line of credit?

Most lenders require a borrower to have a strong company history, good credit, and enough cash flow to cover repayment. An established business with good credit that generates more than a $1 million in revenue could qualify for up to $500,000 in unsecured business line of credit.

A newer business with a limited company history would have a harder time qualifying for a more modest line of credit. It may be possible for a new business to qualify for a $25,000 or $50,000 line if they have two business partners with excellent credit.

Ready to apply for an unsecured business line of credit? Get in touch with Legendary Capital Solutions. We can help you figure out the best financing option for your project and get access to the cash you need, fast. Contact us today.

Disclaimer: The contents of this website do not constitute financial advice and are provided for general information purposes only. If you require specific financial advice, you should contact a financial advisor. We can only advise on the basis of specific client instructions and are unable to offer financial advice by email to people who are not our clients. To learn how to become a client of Legendary Capital Solutions, please contact us.

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