The type of product that is ideal for your business depends on the need for capital, the desired repayment terms, and the amount of capital needed, among other business-related factors. A loan is ideal for businesses looking for traditional financing with a higher capital amount and potentially longer repayment terms.

A line of credit is ideal for businesses that have repeated cash flow needs. It can also be used for a variety of short-term needs, such as managing payroll or covering unexpected costs. A line of credit allows you to repeatedly draw on funds, up to the maximum credit amount approved, while making regular payments to pay off only what you’ve drawn and any associated fees or costs.

With a loan, the business needs to pay back the entirety of the loan including any associated interest charges or fixed fees.

Determining whether your business should apply for a line of credit or a business credit card depends on how much working capital your business is looking for, whether or not your business prefers to set terms and payments, or if your business is looking to get some perks.

A business credit card usually has a set credit limit which can be used at any time. Business credit cards also come with a set interest rate and monthly payments. Some even offer cash back. A business credit card could be useful if your business would rather get these additional perks.

A business line of credit can potentially have a higher credit limit depending on what the business is approved for. Lines of credit come with daily, weekly, or monthly payments and have set terms, which may reset on every draw. A line of credit is a great option for businesses that have repeat cash flow needs or want to have working capital ready for any opportunity. This product allows business owners flexible access to working capital.

Applying for a business line of credit at Rapid Finance is simple and our online application only takes minutes to complete. We’ll ask a few questions about your business and request additional information, such as the owner’s information, last three months of bank statements, verification of identity, business information, and a business checking account. If approved, your business will have access to draw on the approved line of credit through our online client portal.

A line of credit works by giving businesses access to working capital that they can use at any given time. The business is responsible for paying back the drawn amount and any associated interest or other fees. Automatic payments are withdrawn from the business bank account.

Amortization can be from 3–18 months and may reset every time the business draws more capital from the line of credit.

Rapid Finance offers a line of credit calculator that can help calculate what your business may qualify for and what estimated payments might be.