Complete Guide to Business Lines of Credit (2023)

hey how's it going Joe camberato here entrepreneur CEO and founder of national business capital in this video I'm going to talk about business lines of credit what the actual interest rates are and a few things that you really should know and is very important for you to understand [Music] [Applause] [Music] so I found the national back in 2007 since then we've been able to secure over two billion dollars in funding and have completed over 27 000 transactions that number continues to grow every single day when I started National Business capital in 07 I really had one Mission and that was to create a place a platform that business owners can apply and access all the different lending products that are out there for their businesses so we've done exactly that there's over 75 lenders on our platform we do everything from SBA Loans to term loans to business lines of credit you can apply in one place you can speak to a knowledgeable team that's experts in business lending they can explain all the different options that are available all the different interest rates and help you make a decision on what's best for your business and even better they work with you all the way from application all the way through funding we can also bring back multiple options to you so you can pick the best one for you and your business and sometimes what we find is you may think that you need a business line of credit but there may be another product that's available that you don't even know about that makes more sense for your opportunity or challenge in your business what's really important to understand is there's two types of lenders today there's a bank and then there's non-bank lenders non-bank lenders can be called fintech lenders alternative lenders but they're really any type of lender that's outside of a bank Banks typically will give you your best cost of capital where your cheapest interest rate but getting approved for a bank is complicated and much more strict the guidelines are harder banks will typically look at personal credit they're usually going to want a very strong personal credit score 700 plus sometimes less but usually much higher they're going to look at the collateral that you have in your business collateral can be real estate it can be inventory it can be B2B receivables it can be a big equipment and machinery and then they're going to want to see that you're profitable so if you're not profitable typically that will not get a bank if you don't have collateral coverage that usually also knock at a bank and if you don't have a strong personal credit score that also will knock out a bank now if you have all those things that's great you may be able to look at some Bank financing or pull in a very business focused Bank where we can leverage those receivables and give you a really competitive interest rate you do have to remember when working with a bank the process is usually longer it's about 30 45 60 90 it is so typically when going to a bank you're getting approved for a prime rate plus a certain percentage that total number when you add it together is your effective rate what's important to understand is with banks they're going to look at all of these different factors personal credit business credit financials profitability collateral coverage and then those different factors will make up your interest rate what rate you may get may be different from what another business owner will get based on their business versus your business that's completely normal that happens every single day so when getting a business line of credit from a bank the most important things are going to be that you have B2B receivables or real estate that can make can utilize for their collateral coverage in order for you to get a large line of credit now most banks will give you up to a hundred thousand maybe two hundred and fifty thousand if you've got great credit and great profitability but once you start going Beyond those amounts and you want a higher amount of your business grows if you don't have B2B receivables like if you're selling like Walmart Target you know big companies you can use those receivables as collateral to grow your line of credit but if you don't have those things you're direct from consumer um you're in construction it's very challenging to usually grow that line of credit unless you're doing you know all commercial for B2B type of work so if you don't have those things and you're going to absolutely want to look at a non-bank lender there are a number of different lenders out there that will look Beyond you just having real estate or B2B receivables they will look at your credit but they're more lenient they'll go down to typically a 600 credit score or higher and they're going to be very focused on cash flow instead of B2B receivables or real estate because they're more lenient because they move faster a lot of non-bank lenders you can get approved for a credit line today in 24 hours to three to five to seven business days so it's a lot faster underwrite it moves a lot faster and it's a lot they're a lot easier to get so because of that the interest rates are higher typically in The non-bank Lending world or a business line of credit the rates will be somewhere around one percent a month which is about 12 percent annually and will go up from there based on risk so you can be somewhere in that 12 to 18 range but the good thing about a line of credit is you only pay for the interest for as long as it's outstanding so if you borrow money for 30 days and pay it down you can have a rate as low as only one percent which is really great whether you're working with a bank or a non-bank lender a lot of times owners will focus on the interest rate and of course getting uh the best rate that you can you want to do that for your business and you should but if you've got an opportunity in your business you really need to understand the ROI and how to use financing or a line of credit and that type of Leverage to scale and grow your business and to use other people's money to get a return in your business so it's really simple if you understand what the opportunity is and how much you can make by using a line of credit or other people's money in your business and the opportunity and the amount of money you can make outweighs the cost of capital then obviously would make sense to use a credit line to grow and scale your business all right I hope you found this video helpful please remember that interest rates are changing every day for business lines of credit guidelines are changing every single day so when you're ready to move forward reach out to my team so you can find out what the rates are at that time but more importantly so you can share whatever the opportunity or challenges in your business that you need a line of credit for they can talk through it with you they can let you know exactly what your options are how much you'll get approved for what the terms will look like what the rates will look like and also they may suggest other products and programs that are available that you may not be aware about so it's really important to work with a true business financing advisor that understands all the different lending options so you can make the best decision for your business thanks for watching this video I hope you found it helpful I want to wish you nothing but success in your business and make sure you keep growing

Channel: Grow By Joe

Views: 11,083

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Id: kwQJGZpnm5c

Length: 7min 15sec (435 seconds)

Published: Thu May 25 2023