Business Line of Credit in Texas

What Is a Typical Business Line of Credit?

A business line of credit is structured as an open revolving credit facility. This type of funding allows Texas businesses to borrow and draw funds when needed on-demand, make purchases, or cover expenses. Lines of credit charge principal & interest. Business lines of credit have a limit that cannot be exceeded without a lender’s approval and is not open-ended forever and requires renewal by lenders either semi-annually or annually to be extended.

The primary reason customers are interested in lines of credit instead of term loans is the advantage of a draw feature, affordable rates, and flexible repayment intervals that are viewed as a great benefit. Although they are not a loan, credit lines are popular with companies that need working capital and a fast way to borrow funds.

What’s the Difference Between and Benefits of Business Lines of Credit and Business Loans?

A line of credit is essentially a revolving credit line account that you’re able to draw money from an account and only be charged interest on what you take out, like a credit card. Because it’s revolving, you’re able to do reenact this cycle as many times as your lender allows (if you’re paying it back). A business loan typically has a fixed repayment term. With a business loan, you have to determine upfront how much you will need as you will not have the ability to draw capital after consummation. Loans are fixed terms and not flexible.

Lines of Credit Product Features

• Credit limits from $10,000 to $500,000 (larger lines may be available case by case)
• Low interest rates
• Renewal terms from annually to every 18 months
• No origination fee, only draw fees that range from 1.99%-2.99%
• Low $5,000 minimum draw amount (no set loan amount like a loan)
• Competitive rates with interest rates beginning below 1% a month. Fixed rates, not variable rates.
• Short term financing

Get more flexibility to purchase equipment, vendor bills, make payroll, and other cash-strapped activities that cards cannot assist with.

How Do I Get a Business Line of Credit for My Texas Business?

Is It Easy to Get a Line of Credit?

Fast

  • Quick and easy application submission process with decisions same day
  • Only application and bank statements needed for pre-qualification (easier than a bank, that’s for sure)
  • Same-business-day decision and next-business-day funding
  • Seamless online app activation process
  • No site visit required

Flexible

  • Repay early with no penalties
  • Short term financing
  • True revolving lines – each payment replenishes available financing
  • A tool to access and draw as much as you want whenever you want using an online banking portal or mobile app
  • No fixed payments
  • No fixed loan amount
  • Monthly or weekly payments

Affordable

  • No origination fee or maintenance cost
  • Interest rates – only be charged interest for the funds you finance from your account for as long they are used. Accrued daily interest based on the outstanding balance.
  • Every new draw gets an additional term to make all payments.

Most Common Business Needs & Uses of Credit Lines in Texas

• Working capital
• Paying vendors
• Make payroll
• Cash flow
• Short term needs
• Cover emergency expenses
• Expand operations to help the business grow
• Purchase new equipment
• Make repairs
• Fulfill cash-strapped activities
• Instant access to money on demand
• Funds Increased inventory
• Hire employees
• Financing needs for emergency short term cash flow issues

Why Should I Choose a Small Business Credit Line?

The best answer is that it’s flexible!

Most established businesses need capital and want business lines of credit because there is a lot of flexibility in withdrawing for business needs. The only difference is a business owner can use it as they need it and only charged interest on the balance owed, meaning they don’t have to be charged interest on a balance that they didn’t need at the time.

Experienced bankers in Texas still have more traditional methods and typically have the most rigid standards and qualifications for business loans due to banking regulators. Overdraft protection will be required for your business bank account as well. Texas banks have business lines, but for security reasons and other underwriting benefits, check the bank account’s cash flow and reduce the limit periodically. So be sure to ask if this feature applies to your company.

With experienced bankers in Texas, expect a strict application process that can take up to 30 hours to complete. With banking lengthy approval or denial time, you might not know if you are approved for the product for up to 30 days, and even then, you will have to wait to have access to the cash.

Depending on what you need the financing for and the time frame, this could be a great financing option for your company. However, certain needs and uses for businesses are unsuitable for this product and may be better suited for other financing options, loans, and programs. There may be a better financial product available that you might be interested in when it comes time to borrow.

Frequently Asked Questions About a Business Line of Credit

How Much Business Line of Credit Can I Get?

That will depend significantly on your qualifications, debt, and ability to pay back, but a general rule of thumb is that 100% of your business’s monthly revenue is a good guide.

What Can I Use Credit Business Lines For?

You can use this product for nearly any business expense you need, whether it’s billing, managing cash flow, unexpected expenses, new inventory, or equipment purchases. LOC offers more benefits than typical loans.

What Is the Difference Between a Secured and Unsecured Credit Business Lines?

Secured means that the business line is secured with collateral such as property or a personal guarantee. An unsecured line does not require specific types of collateral but may or may not have a personal guarantee. Businesses should expect higher costs and lower limits without collateral or guarantees for an unsecured line. The best rates and terms require security to borrow.

Which Banks Offer a Business Line of Credit?

Not all Texas banks prioritize providing business lines of credit and other business loan options as it’s a high-risk enterprise. You will have to check around if you wish to use a bank to find out who is best.

What Kinds of Financial Institutions Offer Business Lines of Credit?

  • Federal member FDIC Equal Housing Lender Bank & State Banks
  • Credit Unions
  • FinTech Companies
  • Brokers
  • Business lenders
  • Online Banking

What Do Lenders Look At When Qualifying a Business Loan or Line of Credit?

  • Business Credit
  • Personal Credit
  • Business Bank Account Bank Statements (cash flow)
  • Collateral (not required)
  • Profit & Loss (not always required)
  • Debts/ Expenses
  • Real Estate as collateral (rare circumstances related to real estate financing, typically not required)
  • Fixed Assets (not always required)

Can You Get a Business Credit Line Using Real Estate Financing?

Some business real estate financing transactions come with a working capital option attached to the loan program.

Are Sba Loans Like Lines of Credit?

SBA loans are typically fixed-term loans and not lines.

Which Bank Is Best for a Business Line of Credit? The Bank That Handles My Business Bank Account?

The actual question you should be asking is which financial institution or company offers the best line of credit to meet your specific needs. Sometimes an equal housing lender or bank can be difficult to deal with and get approved for a line. Check out who offers you the best terms and services regardless of the company.

How Do I Get a Quote and Loan Offers For My Texas Business?

You can get more information, assistance, and a quote by filling out our super easy and convenient quote form on our website. Get started today by talking to our team at AdvancePoint Capital.

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* All loans made by either WebBank, an FDIC-insured Utah industrial bank, or Bank of the Internet Federal Bank, an FDIC-insured federally chartered thrift located in California. In connection with the loans, the Banks' underwriting conditions and terms apply.