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What is the procedure for obtaining a line of credit?

23 Dec

What is the procedure for obtaining a line of credit?

What is the procedure for obtaining a line of credit?

Like a credit card, a line of credit is a flexible loan from your bank or financial institution. You can use a line of credit whenever you like, and you can pay it off immediately or over time. Borrowers must be approved by their bank or financial institution before they can get a loan or line of credit.

A line of credit is less risky than a credit card. Most banks won’t give out one-time personal loans to most customers, and it’s not economical for borrowers to take out loans often, repay them, then borrow again. Banks give borrowers access to a certain amount of money whenever they need it.

It still means you have to get approval from your bank, so if you have a good credit score, you might be able to get a line of credit. Small Business Lending Source  offers two types of lines of credit. You’re eligible for a small business line of credit if your business doesn’t generate more than $1 million in revenue.

On the other hand, if you have a large business, you may need more income than that. If your business generates between 1 million and $10 million in revenue, you can potentially be approved for a loan amount between $100,000 and $500,000.

A line of credit might be the best compromise if you want an alternative to a traditional loan. Lines of credit are similar to credit cards because you can repay and borrow again as needed, but they are also similar to traditional loans in that you must be approved by your bank or financial institution.

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