Why A Citibank Business Line Of Credit Isn’t Worth Applying For
Business owners who plan on making any major changes will probably end up looking into business financing options. One of the most useful options for financial services in this situation is a business line of credit.
A business line of credit is a form of business financing that allows you to pull funds from a large pool of credit. Most types of business loans have you borrow a large sum of money all at once. You then pay the loan off in small installments, but this isn’t the case with a line of credit.
If you have a business line of credit, what you have is an agreement between yourself and a lender that places a limit on the amount of money you can borrow. It’s not the same as a small business loan or using business credit cards. Unless you’re exceeding the credit limit you and your lender agree to, you can keep drawing funds as needed to finance your business expenses. As long as you also keep up with your payments, business lines of credit are a highly convenient borrowing option.
When you’re pursuing a business line of credit, some terms must be agreed upon beforehand. These terms include:
- The total debt you can incur
- The interest rate
- The annual percentage rate (APR)
- The repayment schedule
- The minimal payment back to the lender.
Because business lines of credit are so flexible, they are appropriate for a variety of funding needs. They can be used to pay for ongoing expenses such as fuel for work vehicles when your liquidity isn’t immediately available. They can also be used for large purchases such as:
- Software updates
- New work vehicles
- Equipment purchases
Advantages To A Business Line Of Credit
The main advantage of a business line of credit is the flexibility it offers. Borrowers and lenders can come to a mutually beneficial arrangement based on the specific requirements that each side has.
Borrowers have a lot of control over their lines of credit. You can draw nothing at all, make one small draw, one large draw, many small draws, and so on. You can also pay in full or just pay the minimum if you need more time and are willing to deal with the interest rate.
Disadvantages To A Business Line Of Credit
As great as a good business line of credit is, the gritty reality is that they are hard to get. Now, we are talking specifically about a good business line of credit. Many awful lines of credit are readily available to borrowers, even in the business world.
On one end of the spectrum you have lenders that may offer a reasonable rate, but they don’t want to deal with anyone they don’t consider worth their time. For a bank like Citibank (more on them soon), you won’t even be eligible until your annual revenues are in the 8-figure range. To make matters worse, they’ll often ask for both collateral and a personal guarantee.
On the other end of the spectrum, you have shady lenders who offer ridiculous APRs and will try to get you stuck in a predatory debt cycle. Surely there has to be a balanced option, one that offers you a decent deal without such a high bar of entry…
The Problems With Citibank
Unfortunately, Citibank isn’t a savior at all when it comes to their business line of credit offers. There are several reasons for this, all of which we will cover. The problems with Citibank’s offers can be summed up by a very high bar of entry when there are alternatives that offer similar deals while being more accessible.
First of all, Citibank will want you to put up collateral for their line of credit offers. This requirement comes on top of their high standards for revenue, credit history, and several other factors.
We all know that credit always comes with at least some risk. That doesn’t mean you should have to add to the risk by putting more of your assets on the line, especially if you’ve already met their stringent requirements.
Credit Score Requirements
Your credit score is used as a major determinant for your loan rates in the vast majority of cases. If a lender doesn’t want to see your credit score, that’s a huge red flag. A credit score of over 670 is considered a “good” score. At Citibank and some other major banks, the score required for you to be able to do business with them starts at 680.
With a credit score as high as 680, you shouldn’t have to put up collateral for most loans. In the case that you do, it shouldn’t be too much. If your credit score is in the “good” range, you’re clearly a financially responsible individual and business owner and which should come with some benefits. You deserve a lender who is willing to take you seriously and trust you enough to take out a line of credit.
Your Business Financials
Citibank looks very closely at your business’s performance. While this is normal for business lenders, Citibank takes it one step further. They look at all the ratios in your business. These include ratios primarily involving debt. In the end, they’ll cover so many ratios it becomes impossible for you to figure out on your own whether or not you’re eligible.
What’s The Solution?
The solution to this problem is Financing Solutions. Our company has created a line of credit product that is tailored to small businesses and nonprofits. The owners of Financing Solutions aren’t your typical stiff-necks sitting around in a boardroom. They’re entrepreneurs themselves and they’ve spent two and a half decades building businesses while working closely with banks. They understand your financing needs as they’ve been in the same position.
The thing is that a bank like Citibank, while it’s great at much of what it does, it’s simply too big to understand the problems faced by small businesses that are still growing. At a certain point, there’s a serious disconnect between big banks and small businesses.
Financing Solutions offers a line of credit that doesn’t cost anything to secure. If you don’t need to draw from their line of credit, then the account will rest and you won’t have to make payments of any kind until you decide to draw funds. It will stay in place and can serve as backup credit if nothing else.
Signing up with Financing Solutions’ line of credit takes just two minutes online. You’ll get a written offer after completing their form. If you have any questions, our staff will be ready to answer them for you.
There are no collateral requirements and no personal guarantees are needed. The only requirements are a credit score of at least 630 and annual revenues of $400,000 or more.
Should you decide to move forward, we will only require the most basic documents like your tax returns, bank statements, and a photo ID. You’ll have access to our simple customer web portal, where you can log in, read the terms, and accept funds.
Our line of credit functions the same way a bank would, but with a more fair bar of entry and more flexibility. You can rest assured that should you face an emergency, you have the financing option you need ready for you when you need it.