How To Get a Line of Credit for New Business

A business line of credit is perfect for businesses that are looking to get access to financing without receiving a lump sum of money. Unlike a business loan that requires you to pay the full amount in the course of time, a line of credit only requires you to pay the interest on the amount you use.
If you are currently trying to get a line of credit, Clark County Credit Union shares five easy steps to help you obtain your business line of credit.

Choose between a secured and unsecured line of credit

Secured and unsecured are the two main types of lines of credit. Both lines of credit serve the same purpose, but each has different requirements when applying.

  • Secured – this type of line of business credit requires the business owner to provide an asset to secure a loan. The business owner can use their bank accounts, stocks or certificate of deposit, their home or business assets as their collateral.
  • Unsecured – an unsecured line of credit doesn’t need collateral. The lenders will require business owners to provide an excellent credit score and higher business annual revenue.

Research the requirements needed to obtain a business line of credit

The requirements for getting approved for a business line of credit might be different for every financial institution. Generally, most lenders will look at these factors:

  • Business Profitability – most lenders require that the business has made a profit during their most recent fiscal year end.
  • Length of Business – the time in business is important for lenders. Most lenders require a business to be around for a minimum of two years.

Compare lenders

Once you’ve determined your eligibility, it’s time to compare lenders that offer the best deal. Make sure you are checking the maximum credit limits, fees, repayment terms and interest rates.

Gather important documents

Now that you’ve decided which preferred lender you want to work with. Your lender will require you to provide documents such as:

  • Tax returns
  • Business license
  • Bank statements
  • Business plan

To get a complete list of documents, make sure that you contact your lender before submitting your application.

Submit your application

Lastly, submit your application along with the required documents to your preferred lender. This step can take as little as ten minutes or as long as five business days to get a decision. Your lender may ask you to provide additional documentation after reviewing your application.

If your application gets approved, you will receive a loan agreement to sign before the lender can issue your line of credit.

Starting a business is an exciting venture and CCCU is here to help our local business owners! Visit our commercial banking webpage for all your business needs, or give us a call to speak to our commercial team at 702-228-2228.