Business Line of Credit

What is a Small Business Line of Credit?

If you’re a business owner looking to grow your business, cover an unexpected business expense, or simply bridge the gap between when you bill for your product or service and when you get paid, a line of credit may be for you. For small businesses, securing working capital can  be challenging. It’s crucial that you understand your financing options so you can land on the product that best suits your business and its capital needs.

A line of credit allows you flexible access to money when you need it most. You can use it to cover business expenses, buy inventory, and ultimately, enjoy improved cash flow month-to-month. Whether you’re experiencing rapid growth or a bump in the road, a line of credit can help you address the needs of your business.

A line of credit allows you to keep doing what you do—create your product, complete your service, and bill your customer. You can borrow up to 85%  against your outstanding eligible accounts receivable and, in some cases, as much as 65% against finished goods and raw material inventory. You only take an advance when you need the cash. This flexibility allows you to meet your working capital needs. As your sales grow, so does your ability to borrow.

Want more insight on how a line of credit works? See our example below.

A staffing company has been factoring their receivables for years. While their customers pay them in 30-45 days, they must pay their employees ever week. To fill that gap, the company has relied upon a small, local factoring company to advance cash against their accounts receivable. The company has been expanding annually and they are now out growing their factoring company and need a financing solution from a lender that has the capacity to grow their line to meet their increasing working capital needs. A line of credit that provides the flexibility to borrow as often as every day against their accounts receivable enables the company to continue to promptly pay their business expenses and, most importantly, their staff. Once the line of credit is in place, the staffing company will be well-positioned to continue to grow for years to come.

Lines of credit are very common for small business owners and can be an affordable option for those looking to obtain working capital.

If a line of credit sounds like the right financing solution for your business, watch our video here:

To qualify for a line of credit, you must have:

  • A credit score of 650+ (check yours for free here)
  • Two years or more in business
  • $250,000 in average monthly billings
  • The ability to pledge short-term assets (i.e., accounts receivable & inventory)
  • No recent bankruptcies, foreclosures or tax liens

The Live Oak advantage:

  • Designed for companies with $2M-$50M- in sales
  • Facility size between $500K-$10M
  • Advance rates up to 95% for accounts receivable and up to 65% against inventory
  • Continuous funding, whether factoring or line of credit
  • Concierge service with an experienced account relationship manager to help manage your client’s account and provide monthly reviews
  • Ongoing, 24-hour funding (after initial credit approval)

Running a business is challenging. By leveraging a line of credit from Live Oak Bank, you can focus on your business knowing the funds you need will be there along the way too.