Small Business Line of Credit

Use a Line of Credit to Grow Your Business

All small businesses go through growing pains. A line of credit can be a lifeline for your business during times of change and cash flow fluctuations. A small business line of credit is ideal for short-term funding needs and is similar to a credit card you can use for any business expense.  A Fifth Third Business Line of Credit can help you increase revenues and expand profits by providing the financial flexibility to cover gaps in business cash cycles. We offer two types of business lines of credit: an unsecured line of credit and a secured line of credit. Learn about the difference between the two types of credit to determine which one is right for you.

Business Line of Credit Uses:

  • Manage day-to-day business needs.
  • Access funds to meet short-term working capital needs, such as inventory purchases, future project costs, or company payroll.
  • Take advantage of immediate business opportunities.
  • Pay for equipment repair and upgrade.
  • Meet seasonal business needs—cover overhead, meet payroll, maintain normal business activities.
  • Finance initiatives or marketing campaigns to attract new customers and generate additional revenue through expanded business or sales.

Line of Credit Types:

Unsecured Line of Credit1

An unsecured line of credit does not require collateral, which are assets a lender can sell if the borrower defaults. The borrower can access up to $100,000. Because the line of credit is unsecured, interest rates are usually higher than a secured line of credit.

  • Provides access to funds via check, Financial Center or online.
  • Access up to $100,000 in less than five days.
  • No collateral necessary for approval.

Secured Line of Credit1

A secured line of credit requires a business asset to be used as collateral. Secured lines of credit typically have lower interest rates and higher borrowing limits because they are less risky for the lender.

  • Requires a business to pledge short-term assets as collateral to secure the loan, such as accounts receivable and inventory.
  • Since secured lines of credit are secured against business assets, they result in higher borrowing amounts over $100,000.
  • Provides access to funds via check, Financial Center or online.

Note: Secured line of credit also available at competitive interest rates. Pay no interest until you draw money from the line.

How Does a Business Line of Credit Work?

A business line of credit works more like a credit card than a term loan. You pay a monthly installment and interest only on the funds you withdraw, unlike a loan where you get a set amount upfront and repay over the loan term. A line of credit provides access to cash when you need it and offers more flexibility than a small business loan. In fact, you can use a line of credit to build your credit score in order to obtain a loan in the future.

Business Line of Credit Requirements

To apply for a business line of credit, you’ll want to have all the required documents ready to ensure a smooth and fast approval process. Below is a general list of documents you need to apply for a small business line of credit:

  • Business and personal tax returns
  • Bank statements
  • Financial statements like a balance sheet and P&L
  • Business and personal credit score
  • ID

Additional Resources

How Your Business Can Take Advantage of Rising Interest Rates

Businesses can leverage high interest rates into cash management and investment strategies. Learn what the interest rate effect means for businesses.

Three Reasons Why Bank Lending to Small Businesses Has Reached Post-Recession Highs

Loan approval rates at big banks increased to a post-recession high in July 2017.

Staying Disciplined in an Era of Alternative Lending

Non-traditional lending practices have taken off during recent financial trends. Learn more about alternative lending and supportive facts with Fifth Third.