Stated Business Income Line of Credit

A stated business income line of credit is for business owners who have the income to qualify for a line of credit but have a hard time documenting it. Conforming to traditional lending guidelines can be challenging and this type of credit line may be a great fit for you. Now it’s important to note that just because you are stating your business income without having to supply documentation does not mean you can inflate the numbers.

An underwriter has the right to request proof of income if he feels that your stated income does not add up. With a stated business income line of credit you do not have to supply profit and loss statements, collateral, tax returns, or documentation to qualify. Requirements may vary but here are some of the most common. Personal credit scores of 680+ In business for at least two years Legal formation documents such as Articles of Incorporation, etc Personal guarantee Another factor that lenders may consider is your overall personal debt to credit limit ratios.

Since you are supplying a personal guarantee, your ability to pay back a line of credit in the event of default is carefully taken into consideration. The amount of credit that will be extended is restricted to the percentage of stated gross sales. Some lenders may limit the amount of credit you receive based on a percentage of stated annual business income. If a lender approves your line of credit the rate of interest is based on your credit scores and range from prime plus 1% to prime plus 4% in the majority of cases.

In today’s economic environment qualifying for a stated business income line of credit requires strong personal credit scores and favorable debt to credit limit ratios. Note: The requirements and guidelines for stated business income lines of credit are changing on a regular basis. Currently, this type of credit line is being offered by very few lenders and private brokers. If you cannot locate a suitable lender to offer this type of credit line then consider a low doc unsecured line of credit.

Rather than supply no documentation, you can submit minimal documentation such as tax returns. Before you apply it’s important to be fully knowledgeable on all the types of credit lines that are available. Whether you have less than perfect credit, a seasonal business, collateral, or strong financials, there may be a specific type of credit line that is better suited to fit your needs and that of your business.