A No Income Verification (NIV) Business Line of Credit (LOC) is a versatile financial instrument that offers easy access to financing, plus the extra benefit of being able to reuse the funds at a later date.
Perhaps, the most appealing feature of a No Income Verification Business Line of Credit is that it is underwritten against more lenient underwriting guidelines than one would use for more traditional financing options. In other words, the relaxed underwriting guides for this line of credit create the greatest chance of a borrower being approved!
An NIV Business Line of Credit can resolve funding challenges many business ventures and startups face — like scant business history, if any, to convince an underwriter to approve the business for financing. The NIV Business LOC offers entrepreneurs a viable financing option fashioned to compensate lenders for the additional risk they absorb when funding high-risk financing scenarios, like those noted above.
The No Income Verification Business Line of Credit is often a cash lifeline for a new business, however, the LOC still requires borrowers to meet certain qualifications. These are detailed below.
What is a No Income Verification Business Line of Credit?
The NIV Business Line of Credit performs like a revolving credit card. In this way, a line of credit operates like a business credit card –funds that are borrowed can be repaid and re-borrowed, as long as the required payments are made in accordance with the loan’s terms.
An NIV Business Line of Credit is unsecured credit, which means if a borrower defaults, the lender has no recourse as the financing required no collateral. This is one of the primary reasons an NIV Business LOC is deemed risky.
This financing method is often provided with an access period available for several months to many years. These loan term details can possibility be negotiated between the lender and the borrower/business.
An NIV Business LOC limit generally ranges from $5,000 to several million dollars; it is contingent upon the borrower/business’ creditworthiness, and the purpose of the loan, among several other factors. In addition, one borrower can open several LOCs simultaneously, if lenders agree to a deal.
The NIV Business Line of Credit is a great way to obtain the financing required to build a business and/or a personal history which will ultimately create additional borrowing power in the future. Check out the benefits of a No Income Verification Loan detailed below.
NIV Business Line of Credit’s Benefits
An unsecured business line of credit that is provided without income verification is the type of financing that is best used for shorter-term financial needs. This is because the interest rates are generally higher than traditional business products designed for more established businesses and organizations. The higher interest rates are used to compensate lenders for the added risk an NIV, unsecured line of credit creates. Here are the borrower’s benefits of the No Income Verification Business Lines of Credit –
- Pay 0% interest during the introductory period (90 days to 2 years).
- It builds credit history.
- It offers reusable credit.
- It is available without a business credit history.
- It is underwritten to lenient guidelines.
- It is a great source of cash flow and emergency reserve requirements.
- It typically offers higher limits than credit cards.
Areas of Concern for using the NIV Business Line of Credit –
- It has a higher interest rate than loans (after the end of the introductory period).
- It is not the best option for long term financing needs.
Getting Approved for a No Income Verification Business Line of Credit
An NIV Business Line of Credit will likely be offered through a bank, although there are alternative lenders providing lenient lending products as well. Clearly, the underwriting guidelines for this line of credit will have no need to verify a potential borrower’s income, however, a Business Line of Credit underwriter will include the following when making a final underwriting decision –
- A Credit History for the Applicant, proper use of existing revolving debt for 1+ year.
- Appropriate Business Licenses, if required.
- The Identification Documents for the Business and the Applicant.
- The Borrower’s statement regarding business goals & plans and Planned-use of Funds.
An NIV Business Line of Credit relies heavily on the potential borrower’s credit history as this verifiable data offers the best predictor of future behavior — the borrower’s past credit-behavior patterns.
How to Spend No Income Verification Business Line of Credit Funds
An NIV Business Line of Credit typically has no restrictions on how the funding is to be spent. A line of credit offers easy access to money, however, many borrowers are easily tempted to spend the money without due caution. This is unwise as the cost of this financing is can be expensive when spent frivolously. The reality is if the financing is used recklessly, an NIV Business Line of Credit can do more harm than good. Proper uses include –
- Cash Flow Uncertainties.
- Support Services — Advertising & Marketing.
- Purchase Supplies & Stock.
- Set-up Costs.
- Complete Purchase Orders, among others.
Ready to Apply? Reach Out to a Lending Professional for Expert Help
This article offered the basics of the No Income Verification Business Line of Credit product. The NIV Business Line of Credit offers many a viable financing opportunity where there once was none. The next step is to reach out to a lending expert to help fine-tune your thinking about your financial needs and how the NIV Business Line of Credit loan product can meet those needs.
Borrowers are advised to play it safe, and not to Go It Alone, in the often-tricky world of business financing. The complex financial components and the many significant factors to consider when deciding on the best financing is often overwhelming — and best left for lending professionals.
The Best Experts Will Help You Find the Best Funding Options to Meet Your Specific Business Needs
The same vigilance used in selecting the LOC financing should be used in choosing a lending expert with whom to work. The best lending experts armed with the tools to help avoid underwriting pitfalls and to locate the No Income Verification Business Line of Credit sources that best fit your financing objectives.
If you find a lenders that offer No Income Verification Business Lines of Credit that meet your business objectives, be certain that you understand the finite details before legally agreeing to the offered potential debt. Reviewing the loan commitment letter and finding the answers to questions/concerns through a trustworthy lending expert can help you maintain a vigilant approach.
She has spent the last decade assisting entrepreneurs with starting new businesses, obtaining startup and working capital and growing their customer base.
She enjoys writing about her experiences as an entrepreneur and using data and information from reliable sources to back up what she writes about. Through her writing she aims to educate other entrepreneurs on how to obtain capital and build successful businesses doing what they love.