Chase Business Lines of Credit
Chase business lines of credit offer $10,000 to $500,000 of revolving credit with monthly repayment schedules and annual fees of $150 or $250 depending on your credit limit. The business lines of credit that Chase Bank offers will offer the low rates that make bank financing so attractive in the first place. But they’ll also be more difficult to qualify for, as is the case with most bank loan options.
More than 80% of banks reported that they tightened their lending standards for small businesses after the recession. And currently, only about 20% of small business owners applying for bank loans get approved.
So for many business owners, a bank line of credit is simply out of reach. However, if you’re a qualified business owner, then the Chase business line of credit could be the right financing option for you.
In this guide, we walk through the business line of credit Chase offers to help you determine if it’s the right fit for your business.
How Does a Business Line of Credit Work?
Before we get into the nitty gritty of these Chase business loans, we should clear up what a business line of credit is (and why a business owner would want one) first.
A line of credit gives you access to a revolving credit line, which you can use like a credit card. You can draw up to the amount of your credit limit, and repay what you drew over a set amount of time. You’ll only pay interest on the amount you draw from the line, and once you’ve repaid, your credit line gets refilled to its original amount. But when it comes to a line of credit versus a credit card, lines of credit give you access to capital.
Because business lines of credit simply sit in your back pocket until you need it, and replenish once you’ve paid back, a line of credit is a particularly flexible type of financing.
Unlike more traditional business loans like term loans, you don’t have to worry about repaying it the next week after you’ve funded. Instead, it can act like a cushion on your cash flow, using it whenever you really need to.
Chase Business Line of Credit: The Details
Now that you have a sense of how a line of credit functions, it’s time for the details: What can you expect with a Chase business line of credit?
With their traditional line of credit, Chase approves you for a pool of funds—anywhere as small as $10,000 to as large as $500,000.
Like a traditional business line of credit, you can draw on the pool of funds whenever you want or need to for your business.
You’ll pay Chase back, plus interest, over a monthly payment schedule. This means that with the business line of credit Chase offers, you’ll have a pretty comfortable repayment period. This is unlike shorter-term, non-bank line of credit lenders that often require daily or weekly repayments to replenish your credit line (which can take a toll on your daily cash flow).
A Chase business line of credit is revolving credit, meaning once you pay back what you’ve borrowed, your credit line gets refilled to its original amount. Until you’ve fully repaid what you borrowed, Chase will deduct automatic monthly payments from your Chase business checking account. (This means that to get a Chase business line of credit, you’ll have to have a Chase business checking account.)
Chase Business Line of Credit: Rates and Fees
A Chase business line of credit rate comes variable and is indexed to the Prime Rate. The actual rate you get on a business line of credit Chase depends on credit score and business financials. However, typically bank loans and lines of credit have rates below 10%.
Chase business lines of credit come with fees, too.
You’ll have to pay an annual fee. If your credit line is $50,000 or less, your annual fee is $150. If it’s more than $50,000, you’ll have to pay $250 as an annual fee.
Be sure to calculate fees into your total APR to see what the financing will really cost you.
How to Use a Chase Business Line of Credit
A Chase business line of credit is the ideal option for business owners who need access to cash for a short time frame.
Any business owner who has cash flow fluctuation issues should have a line of credit. When your cash flow fluctuates or you have general working capital needs for your small business, you can tap into your line of credit to use the funds however you’d like.
While generally you’ll be using your line of credit for business financing and growth purposes, Chase also allows you to use your line of credit as overdraft protection on your Chase business banking account.
This means that when your line of credit is linked to your Chase business checking account, you can draw from your line of credit to make purchases even when you don’t have sufficient funds in your checking account.
Tapping into your Chase line of credit might be a different process for each borrower. And generally, tapping into your line of credit might be a little more complicated with Chase than with other line of credit lenders. To get to the line of credit to make a draw, you’ll need to write a check, use an access card, transfer funds on the telephone, or go through Chase’s website to access your line of credit.
Chase Business Line of Credit Versus Chase Commercial Line of Credit
Beyond a traditional business line of credit, Chase also offers a commercial line of credit.
What’s the difference between the two?
Well, a commercial line of credit Chase offers is more geared towards bigger businesses with large working capital needs. According to Chase, their commercial line of credit is best for things like expanding into new markets or managing seasonal changes in expenses.
So generally, their bigger and longer term.
These Chase lines of credit typically are larger than $500,000. The terms are initially set at 12 to 24 months, but given that you’re in good standing with the bank, you can renew your commercial line of credit.
And like the Chase business line of credit, the commercial credit line has variable interest rates indexed by the LIBOR(London Interbank Offered Rate). You won’t have to worry about annual fees with the Chase commercial line of credit.
To repay what you draw from the line of credit, you’ll have monthly payments on only what you owe in interest.
Chase Business Line of Credit: How To Qualify
To evaluate eligibility for all Chase business loans, Chase looks at the type of business financial information that you might expect.
And it’s important to note before going into the process of applying that it’s tough to qualify for any bank business line of credit, and qualifying for the Chase business line of credit is no exception.
Here are the credentials Chase will take into account:
Your Business and Personal Finances
If you’re looking for a Chase business line of credit, then you should look at your financials closely and get them in tip-top shape.
And when we say financials, we mean a lot of things. But the three main things Chase will look at is your credit score, fixed assets, and your debt-to-income ratio.
Just like any traditional bank, Chase considers your personal and business credit score closely before working with you. If you don’t have a strong credit score (think 680+) to prove that you’ll repay your line of credit once you draw from it, Chase probably won’t approve your business line of credit application.
Chase also considers your assets when deciding your eligibility.
Chase is looking for valuable assets that they can easily liquidate in case you default on your loan payments. This means that Chase will look at your cash reserves, home equity, and vehicles to get a sense of the value of your assets.
They’ll also look at your personal financial information if your business doesn’t have any real history to go by.
Finally, Chase will closely consider your debt-to-income ratio.
This ratio is simple: it evaluates how much debt you have on the books compared to how much income you’re bringing in. Debt includes any mortgage or rent payments, car loan payments, credit card payments, and existing loan payments. The best borrowers have low debt-to-income ratios. Having a debt-to-income ratio below 20% might mean that you’re eligible for a Chase business line of credit.
Your Business History and Trajectory
To qualify for a Chase business line of credit, make sure you have a solid business plan ready for an application.
This is a must-have on any bank loan application.
Chase wants to see what your finances have been like in the past, and what you’re projecting in the future.
They’ll want to see that the two add up. After all, if you’ve struggled financially in the past, there isn’t much reason to believe you’ll hit your financial goals in the future. On the other hand, success in the past will give Chase confidence that you’ll do well in the future—and have enough cash on hand to meet your line of credit repayment obligations.
A business plan isn’t just about the financials, though. It also outlines your customers, your market, your product line, and so on.
Your business plan is your opportunity to prove to Chase that lending to your business via a line of credit is a good investment, so be sure to put time and thought into planning it out.
Chase Business Line of Credit: Top Alternatives
If you find yourself interested in the business line of credit Chase offers, you can apply by visiting one of the Chase branches.
Or, if you’re a qualified borrower and want to be sure what your options are, you should compare what you qualify for at other banks. Capital One business lines of credit, Bank of America business lines of credit, or Wells Fargo business loans will be similar options to check out.
But if you apply and find that you don’t qualify for a Chase line of credit, you might be wondering what your other line of credit options are.
Well, the next step down from bank lines of credit are lines of credit offered by alternative, non-bank lenders.
These non-bank lenders offer a similar product, but easier access to financing. While you won’t get rates as low as what Chase offers for their line of credit, you’ll benefit from these lenders’ accessibility.
Kabbage is the quintessential accessible, fast line of credit lender. While they offer a similarly structured product to Chase’s, the do offer a very different product.
The maximum line of credit amount with Kabbage is $150,000, with terms of either 6 months or 12 months. The interest rate structure on a Kabbage line of credit is pretty unique: Kabbage charges a flat monthly fee of 1.5% to 10% on your remaining loan amount. For the first two months of repayment, your monthly fee is 1.5% to 10% of the total amount you borrowed (if your term is set to 6 months). If your repayment term is set to 12 months, you’ll pay a fee of 1.5% to 10% on the total amount borrowed for up to six months. For the remaining months (no matter what your loan term is), you pay a 1% on the total amount you borrowed.
Kabbage is one of the most accessible lenders on the market—they don’t even set a minimum personal credit score to qualify (they’ll look at your personal credit score, though). After that, you’ll need to have 12 months of business under your belt and a minimum of $50,000 to qualify.
OnDeck offers both short-term loans and lines of credit for a variety of business financing needs.
Their line of credit product goes up to $100,000 for a short maximum repayment term of 6 months. Rates on an OnDeck line of credit range from 13.99% to 36%.
To qualify, you’ll need a minimum of 600 credit score, 9 months in business, and at least $100,000. You’ll certainly find that OnDeck’s product is much easier to qualify for than a Chase business line of credit.
Plus, OnDeck offers financing fast. It takes about 10 minutes to apply, and the underwriting process will take no more than a day or two. The funds will be deposited into you account the same day you apply.
BlueVine is better known as an invoice financing company, but they do offer a line of credit product called the “Flex Credit.”
The line of credit goes up to $150,000, with a fixed 6 months or fixed 12 month term. (The 12 month term option has a monthly payment plan.) A BlueVine line of credit has rates ranging from 18.20% to 62.40%.
Qualifying for a BlueVine line of credit is slightly harder than OnDeck or Kabbage, as they require a minimum personal credit score of 600 and more than $120,000 in annual revenue.
However, BlueVine might be the best option for businesses what are slightly younger, as they only require 6 months in business to qualify.
Chase Business Line of Credit: The Bottom Line
There you have it—all the ins and outs of everything you need to know about the Chase Bank business line of credit. Now that you’re familiar with the details on this low-cost business financing option, it’s time for you to decide if applying for the Chase business line of credit is worth your time. If you’re not likely to qualify, we suggest opting for a more accessible business line of credit. But if your business and personal finances, along with your business history and trajectory, are in ship shape, this could be your very best financing option.