A business line of credit is a unique funding option used by many types of businesses across Canada.
Different than a business loan or financing, lines of credit are noted for their flexibility. Additionally, lines of credit can help make the cost of borrowing funds from a financial institution more manageable.
Wondering how to get a business line of credit in Canada? Let’s take a closer look at what a business line of credit is. Then, we’ll dive into how to apply for this type of business credit.
What is a Business Line of Credit?
In the simplest terms, a business line of credit offers a set amount of money, provided by a bank or credit union. Your business can access it whenever needed, up to the limit set by the financial institution. As you pay down your balance, the available credit increases.
That means you can use your business line of credit over and over again. Investopedia points to this flexibility as the main advantage of a line of credit.
In a practical sense, the ability to replenish a line of credit is the most important thing to keep in mind. It’s what sets lines of credit apart from loans and many other types of business financing.
Loans offer a set amount of money, either as a lump sum when the loan is approved and processed, or in a set of disbursements. Once a loan is paid back, the agreement has been satisfied and the loan ends. That makes them very useful to address specific large purchases and defined long-term needs.
Lines of credit can be tapped for those large expenses as well. They’re also a source of working capital and can help to address a variety of smaller and short-term costs. NerdWallet points out that lines of credit are especially useful when projects and other business needs have more fluid timelines and variables in cost.
Because you can make payments over time, a line of credit helps spread out the impact of these expenses. That can lead to a stronger, more financially resilient business.
Can a New Business Get a Line of Credit?
Lenders take a variety of factors into account when making decisions about line of credit applications. That includes, but is far from limited to, your business’s financial and operational history.
While established and successful businesses have an advantage when it comes to their applications, don’t think it’s impossible for a new business to get a line of credit.
A strong personal credit score and credit history can help you secure a line of credit for your business. Other factors, such as applying for a low credit limit, can also help new companies access this valuable resource.
If you choose to work with a community-based lender like Innovation Federal Credit Union, don’t be afraid to reach out for a preliminary discussion or guidance on applying for a business line of credit. We want to help you find accessible funding for your business.
Getting a Line of Credit for Your Business
Interested in how to get a small business line of credit to serve as a financial safety net? Have a large and established business and want to secure a line of credit to help address key needs?
At Innovation, applying for a line of credit is simple for our members. Our online request form makes it easy to start the process with an inquiry in just minutes. You can quickly share basic business and contact information. We’ll review your inquiry and then get in touch to keep the process moving along.
Why choose Innovation as your partner for a line of credit? You can access low interest rates and save money as compared to a business credit card. You’ll also benefit from lower minimum payments, increasing the flexibility offered by a line of credit.
All Innovation, members enjoy additional benefits, too. Our Member Rewards program pays profit sharing dollars to members, just for banking and taking out loans and lines of credit with us. That’s money back in your business’s pocket! Set up a business bank account to earn even more!
Once approved, a line of credit is flexible, refillable, and always immediately accessible for our members. Give your business the financial safety net it needs. Apply for one today!