A business line of credit: what does the lender look for?
A revolving line of credit is a limit to draw on and repay as needed; lenders ask more for it than for a one-time advance. The lender sets the limit and its cost, in its written offer.
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- How does a line of credit differ from a term advance?
- A line is a limit you draw on, repay and draw on again; a term advance is disbursed once and repaid on a schedule. On a line, interest runs only on what is drawn; any other fee is set in the lender’s written offer.
- Who is offered a line rather than another product?
- Lenders tend to reserve lines for businesses with a longer history, steady deposits and a credit file that meets their own criteria. When a line does not fit, another product can be presented.
- Is a credit check needed?
- Not while you apply on our site. A lender usually consults the credit file before offering a line, only with your permission.
- What if the lender declines a line?
- It, or another lender, may offer a different product instead, such as a term advance sized on your deposits. You remain free to decline any offer.
What the lender looks at
- Actual deposits, month by month
- The limit a lender considers follows what goes through the account each month.
- Days in overdraft
- A business that already lives in overdraft is read as using a line it does not have.
- NSF cheques
- A returned cheque weighs heavily on a revolving product.
- How long the business has been operating
- Lines usually go to businesses with a longer history; the lender sets its threshold.
$0 upfront · 7% only if funded
An intermediary, not a lender.
The lender sets the final amount and its cost in its written offer.
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