Finimpact

Conclusion

When businesses need a short-term loan, a working capital line of credit may be the perfect option. If you expect to make multiple purchases in a short time frame, a line of credit is revolving meaning as soon as you pay down the balance you can start to use your loan amount again. Working capital lines of credit are often faster funding options and you don’t need an excellent credit score to qualify.

FAQ

How hard is it to qualify for a working capital line of credit?
You’ll find plenty of lenders that require more than a fair credit score to qualify, so it’s not overly difficult to qualify. You’ll just need to make sure you’ve been in business for at least a few months. If you’ve just started out, a line of credit isn’t your best option.
How fast can I get the funds?
Some online lenders promise turnaround times of 24 hours, but brick-and-mortar banks will likely need at least a couple of days, if not a week or more to review your application.
What is the difference between a working capital line of credit and a revolving line of credit?
A working capital line of credit is a form of a revolving line of credit. As long as you pay down your balance enough to have an open line, you can continue to use your credit line until the repayment time frame ends.
How much does it cost to take out a working capital line of credit?
If you stick with online lenders, you can get a working capital line of credit without paying any fees. You won’t get out of paying interest, though. Depending on your credit score, you could have a relatively low interest rate, but those with lower scores will have to be comfortable paying higher rates.

About the Author

Christopher Murray

Christopher Murray

Personal Finance Expert

Christopher Murray is a professional personal finance and sustainability writer and editor who enjoys writing about everything from budgeting and saving to unique investing options like SRI and cryptocurrency.

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