Home / Commercial lending / Business line of credit
For the gap between doing the work and getting paid.
Revolving credit for businesses nationwide. You draw what you need, pay it back, and draw again. It is the right tool for timing problems and the wrong tool for buying things that last for years.
What a line is actually for.
A line of credit solves one problem: money going out before money comes in. If that is your problem, nothing else fits as well.
Payroll between invoices
You have done the work, the invoice is out, and the client pays on their schedule rather than yours. Your people get paid on time either way. This is the single most common reason a line exists.
Stocking up before the season
Buying inventory in volume ahead of the months when you sell it. Money out now, money back over the season, then the line is clear and ready for next year.
Taking the job that is bigger than usual
A contract you can deliver but cannot float. The line covers materials and labour until the payments start arriving, and then it closes again.
A cushion you hope not to touch
Arranged while trading is good, sitting there for the quarter that disappoints. The time to ask for a line is when you do not urgently need one, because that is when the file is strongest.
When a line is the wrong answer.
We would rather tell you this now than arrange the wrong facility.
You are buying equipment
Something that will still be working in five years should not be funded by revolving credit. Equipment finance is secured by the machine itself, which usually makes it both easier to get and better suited to the life of what you are buying.
You are buying property
Property belongs on a commercial mortgage, and a building you are putting up belongs on a construction loan. A line will not stretch that far and should not.
You are buying a business
That is its own file, usually with its own structure. See business acquisition.
The line never goes back to zero
A line that stays fully drawn month after month is not a timing facility any more, it is a term loan with the wrong paperwork. If that is where you are, say so and we will look at restructuring rather than renewing. Lenders notice this too, at renewal.
Lines get reviewed, not granted forever.
A line of credit comes up for review, usually annually. The lender looks again at how the business has traded and how the line was used, and decides whether to renew it, change it or pull it.
Two practical consequences. Keep your financial reporting current, because review time is the wrong moment to be eight months behind. And use the line the way you described it: a facility you said was for seasonal inventory and then ran flat out all year is the kind of thing that gets a renewal declined.
Arrange it before you need it.
The business that asks for a line while trading well gets a better look than the same business asking in the month it runs short. Nothing is owed for the conversation, and we will tell you plainly if a line is not the right facility for what you are describing.
What to have ready.
A line is underwritten on how the business trades, so the trading records matter more than anything else here.
- Business tax returns for the last three years, all pages
- Personal tax returns for the last three years, all pages
- Business bank statements for the last three to six months
- Year-to-date profit and loss, and a balance sheet
- A current debt schedule
- Accounts receivable and accounts payable ageing, if you invoice
- Entity documents and valid photo identification for each owner
- A sentence on what the line is for and how it will clear down
That last one is not a formality. The clearest explanation of the cycle, money out here and back by then, does more for a line application than any other single thing you can send.
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