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Lines of Credit

If you need to borrow frequently or an uncertain amount, a line of credit is an ideal solution. Borrow as much as you need up to your limit and pay down the balance to free up more funding.

What is a line of credit?

A line of credit (LOC) functions a lot like a credit card but with higher limits and lower APRs. You’re granted a credit limit by your lender which you can borrow from as needed. Once you hit your limit, you can no longer take out funds unless you make a payment. Making regular payments on a line of credit reflects positively on credit reports and helps you build a good financial reputation.

In most cases...

you’ll need to prove your income with a tax return for the previous year in order to qualify. If you don’t already have good credit, getting approved may be a challenge. Some lenders will allow you to secure the line with collateral to mitigate their lending risk. Interest rates can be fixed or variable, so be sure to check the fine print when considering a line of credit.

What is a line of credit?

A line of credit (LOC) functions a lot like a credit card but with higher limits and lower APRs. You’re granted a credit limit by your lender which you can borrow from as needed. Once you hit your limit, you can no longer take out funds unless you make a payment. Making regular payments on a line of credit reflects positively on credit reports and helps you build a good financial reputation.

In most cases you’ll need to prove your income with a tax return for the previous year in order to qualify. If you don’t already have good credit, getting approved may be a challenge. Some lenders will allow you to secure the line with collateral to mitigate their lending risk. Interest rates can be fixed or variable, so be sure to check the fine print when considering a line of credit.

Revolving

A revolving line is one that you can borrow from, pay down, and borrow from again. Most LOCs are revolving lines.

Non-revolving

This is similar to a revolving line, except that payments don’t free up more borrowing room. Once the line is paid off, it’s closed.

Demand

This rare type of line is like a revolving line, except that the lender can demand full repayment of the funds at any point.

Advantages of a line of credit

01

Lines of credit are more flexible than fixed loans.

02

Borrow and pay cycles can continue indefinitely.

03

Most lines have higher credit limits than credit cards.

04

Lines can help cover high-ticket purchases and expenses.

FAQ

When is a line of credit not a good fit?
To finance an asset you intend to hold long term or one with a high ticket price, a line of credit isn’t the best fit. When you need cash flow flexibility to improve working capital, a line of credit is a great tool.
Why not just get a credit card?
Credit cards offer a number of advantages. However, lines of credit offer higher limits and lower interest rates than most credit cards.
What if I don’t borrow from the line?
Many lenders do charge a maintenance fee to keep the account open, but some do not. Based on your planned use, we will work with you to identify the best lender to suit your needs.
Do I need collateral for a line of credit?
Some of the lenders in our network could require collateral. If collateral isn’t feasible for you, we’ll work with you to find a lender who can offer an unsecured line.