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Unsecured business lines of credit are arguably the most accessible type of business financing there is. Business financing can be difficult to obtain or completely inaccessible for many entrepreneurs. However, unsecured business lines of credit can be obtained by just about any business owner. This is one of the many reasons why LenCred focuses on helping startup and established small business owners obtain unsecured business lines of credit.


While there is no catch, a solid, well-established personal credit history is required to qualify. The owners of the business (or whoever is acting as a personal guarantor for the business), must have a good credit history to qualify. Not perfect credit but solid. That’s where LenCred can help. We’ve been doing this for 10 years. We know what works and what doesn’t.


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Most entrepreneurs and small business owners need financing to start, build, and grow their businesses. When acquired and used properly, financing is an investment in growing a business to achieve goals and dreams. When obtained incorrectly or used poorly, financing will hurt cashflow and/or damage relationships and decrease the chances of business success. When you understand your business credit and financing options, and you work with a trusted advisor who understands them, you greatly increase your chances of getting the right kind of financing to start, build and grow your business.

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What is an Unsecured Business Line of Credit?

An unsecured business line of credit is a type of revolving debt that can be obtained without pledging collateral to a lender. All type of credit lines—including business credit cards, personal credit cards, and personal lines of credit are revolving debt. Once obtained, you can have access to them for the life of your business or as long as the lender wants to continue their relationship with you. This is one of the biggest benefits of having an unsecured business line of credit (versus a term loan).


Term loans (like unsecured business loans and general small business loans) are not ongoing. Once the loan has been paid back, you have to reapply for another loan and there is no guarantee you will be approved again. Term loans may have lower interest rates, but unsecured business lines of credit have a longer lifeline. Ongoing access to working capital will be necessary for most small business owners to maintain their business.


How Do I Get Approved for Unsecured Business Lines of Credit?

If you want to qualify for an unsecured business line of credit, you should first understand what your options are. There are different types of unsecured business lines of credit. To get approved for each type, you must meet certain criteria. Knowing what criteria unsecured business line of credit lenders want you to meet will help you determine if you qualify to get approved. LenCred helps startup and established business owners obtain financing for their businesses. A critical part of the LenCred financing process is helping business owners understand their funding options based on lender requirements. Another critical part of the process is identifying the criteria that must be met by borrowers to get approved.


A well-established personal credit history is needed to get an unsecured business line of credit. As a rule of thumb, your personal credit history should be at least five years old. You should also have at least one personal credit card in your name (with at least a $5,000 credit limit). The personal credit card should be at least one year old. Lenders will want to see that you can manage credit card debt over time before they will approve you for an unsecured business line of credit. That’s why it’s important to have a personal credit card in your name for a period of time before you apply for an unsecured business line of credit. If you’ve never had a personal credit card in your name, you likely won’t qualify for an unsecured business line of credit.


Total Credit Utilization is Important

If the personal credit card you have in your name is over 30% utilized, you will be denied for an unsecured business line of credit. It’s wise to keep the amount of the personal credit card you use under 30% of the total available credit limit. For example, if you have a $10,000 personal credit card in your name, it would be wise to use no more than $3,000 of it. Anything over that amount would increase your utilization over 30% and lenders will see it as you’ve maxed out your credit cards. You will need to pay the balance down to qualify for an unsecured business line of credit (and any new personal credit cards you want to apply for).


Avoid Late Payments or Not Paying Your Bills at All

In addition to keeping your credit card usage low, you can’t have any derogatory or delinquent accounts reporting on your credit profile. Late monthly payments, collections, unpaid tax liens, repossessions, and bankruptcies will get your application for an unsecured business line of credit denied. You also can’t have a lot of recent hard inquiries (in the last six months). Hard inquiries happen when lenders pull your credit report for the purpose of making the decision to extend you new credit. The best way to get approved for an unsecured business line of credit is to maintain a good credit history and higher than average credit score.


If you qualify for an unsecured business line of credit, LenCred can help you get approved at the lowest interest rates possible. The majority of LenCred clients get approved for unsecured business line of credit with 0% introductory interest rate offers. To learn more about unsecured business lines of credit and how LenCred can help you get up to $50,000 or more for your startup or established business, pre-apply now or continue reading.

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Why You Should Apply for an Unsecured Business Line of Credit

Unsecured business line of credit financing is popular amongst small business owners in need of capital to start or grow their business. According to the most recent National Small Business Association survey, at least 86% of small business owners reported that they were using unsecured business lines of credit as a crucial part of their business capitalization strategy. Based on this number, we believe it’s safe to say that all startup and established small business owners should consider examining the advantages of applying for unsecured business lines of credit and using them to start or grow their business. Here are 5 reasons why you should consider applying for an unsecured business line of credit if you are a small business owner:


Separation from Your Personal Credit

Obtaining an unsecured business line of credit will enable you to separate your personal credit from your business credit. Using personal credit cards to fund your business expenses may impact your personal credit score and history because lenders will report your credit card usage to the personal credit bureaus. It’s wiser to use unsecured business lines of credit to cover business expenses, because most lenders will not report your usage of the the business credit lines to the personal credit bureaus (unless you default). Therefore you rarely have to worry about business credit lines impacting your personal credit score and history.


Build Your Business Credit

Obtaining unsecured business lines of credit will enable you to start building your business credit score and history. Some lenders may report your small business credit card usage to corporate credit reporting companies such as Experian Business or Dun & Bradstreet. Reporting your small business credit card usage to these companies will enable you to build a credit score and history. Eventually, you may be able to qualify for small business financing strictly using your business credit (without providing any personal guarantees). As a small business owner, it would be wise to strive for building a good business credit score and history so you no longer have to qualify for financing strictly using your personal credit score and history.


Low Cost & No Collateral Needed

Many unsecured business line of credit providers offer credit lines that have 0% introductory interest rates for the first 6 to 12 months. This means you can use the business credit lines without paying interest (up to the end of the first year)! Furthermore, business credit lines are typically unsecured which means you do not have to pledge collateral to be approved. With an unsecured business line of credit, you are able to keep your costs low and protect your assets.


Larger Credit Limits

Most unsecured business lines of credit have larger limits than your typical personal credit cards. Business credit lines can have limits of up to $20,000 or more. Lenders will continue to increase your credit limit (over time) if they see that you are able to maintain it well. This is good for small businesses that need to make size-able purchases. Higher credit limits may also help you avoid a high debt to credit limit ratio. The bigger the business line of credit, the less you may need to use.


Plenty of Rewards

Unsecured business lines of credit often come with plenty of perks and rewards. Many business credit lines offer discounts on travel related expenses such as airplane tickets, hotels, and rental cars. This is especially good for small business owners who travel often. Other perks and rewards can include discounts towards goods and services needed to operate the business.

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