The process to qualify for a line of credit will depend on the requirements of individual lenders, but there are some common standards. The following information is crucial to qualifying for a good line of credit with good terms:
- Good credit score (typically above 600)
- Strong cash reserves or strong cash flows
- Age of business and length of time your business has been profitable
- Well-constructed business plan
While the specific requirements differ from lender to lender, lenders will likely take the above factors into consideration. We recommend businesses first apply for a line of credit with a traditional lender like a bank. Banks will often give the most competitive rates but have longer application processing times and stricter requirements. If you can’t qualify with a bank, consider online lenders, which often have more lenient requirements and faster funding times but typically charge much higher rates.