Can I Get a Business Line of Credit for a New Business?

Business Line of Credit

New businesses are often in need of financing and one area that is usually of interest to any company is the use of a business line of credit. Lines of credit for business offer a method of building up the company’s credit worthiness while also providing needed funds as required by the company in a revolving loan. This revolving loan means that the company can use the funds, pay it off and then use funds from the same account again similar to using a credit card with lower interest rates. The question then becomes whether it is possible to obtain a start-up business line of credit.

New Business Challenges: A new business is often limited in the start-up business line of credit options because many banks are unwilling to offer this type of financing option to a new company. The primary concern is that the business might be well enough established to find out any credit information and thus is not yet credit worthy enough to obtain the revolving account.

Another challenge is providing proof that the company is making enough profits for the line of credit. As a new business, the proof of income is still not available because the company has not even been established. This creates a challenge that is difficult to overcome since the business might not be able to prove they can make enough income.

Eligibility Requirements: A start-up business line of credit is generally not available. Banks usually have minimum eligibility requirements that need at least two years since the company was established before they will provide a line of credit. Another factor is the profit margin. The business line of credit through many lenders determines the maximum amount based on the profits from the company. In general, a new company is ineligible for a line of credit.

Personal Credit: Those who are planning to open a line of credit for the business might instead take out a personal line of credit and use it in the business for the first year or two during the company’s development.
Lines of credit for business are a convenient financing tool. Unfortunately, a new business needs time to establish credit worthiness before they are eligible for the financing option. Despite this challenge, it is possible to obtain some financing with a little creativity and planning.

For more information, go to Business Line of Credit at

Can I Get a Business Line of Credit for a New Business? was last modified: January 13th, 2012 by Amit Kraidman
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