Any business can run out of funds, so having a backup like a line of credit makes sense. Your business line of credit (LOC) is a revolving financing that gives you access to funds up to an approved limit. 

You can draw funds from that approved limit on an as-needed basis, and continue doing so until you hit the limit. However, once you repay some or all of the borrowed money, it becomes available again, and you can dip into it whenever required. 

That said, you’ll come across multiple business lines of credit in your research; some will genuinely support you, and some might pull you into further obligations. Hence, we’re reviewing one of the popular lines of credit, offered by Chase Bank, today to see how fitting it is for businesses in a crunch. 

Keep reading to make an informed decision.

Chase Business Line of Credit 

Chase Bank, the consumer and commercial banking arm of JP Morgan & Co., offers a business line of credit to help small-to-medium businesses fulfil liabilities and fuel their growth. You are approved for a credit limit and draw funds only when needed, transferring them through Chase.com into your Chase business checking account.

This LOC follows a two-stage structure. The first 5 years are known as the draw period, during which you can borrow, repay, and borrow again if needed. It essentially means your minimum monthly payments are based on the amount used. After that period, the next 5 years encompass the repayment period, i.e., your time to pay off any remaining balance. 

Since this line of credit’s interest is variable and tied to the Prime rate set by banks for credit lines, your borrowing costs move with the broader market. 

In essence, a line works much like a business credit card; it offers flexibility for short-term goals, cash flow gaps, and unexpected expenses without the commitment of a term loan.

Key Features of Chase Business Line of Credit 

  • Credit limit: $10,000 – $500,000
  • Draw period: 5 years plus potential to renew
  • Repayment period: 5 years to repay any remaining balance after the draw period ends
  • Interest rate: Variable (goes up and down with the prime rate)
  • Interest charges: Interest accrues only on the amount you draw
  • Minimum monthly payment: 1% of the outstanding balance plus accrued interest
  • Application and origination fees: None
  • Annual fee: $200 or 0.25% of the approved line, whichever is greater, up to $750
  • Annual fee waiver: Waived after the first year if your 12-month average use is at least 40% of the line
  • Collateral: Only secured lines of credit are available; Chase does not offer unsecured lines
  • Personal guarantee: Required from anyone with 20% or more ownership
  • Minimum annual revenue: $100,000
  • Minimum FICO® score: 660

Who Does Chase Business Line of Credit Suit?

The standard terms of Chase business lines of credit largely remain standard, but how they impact a company depends on its own financials and operations. For example, if a business takes on a line of credit assuming repaying it will be easy, but doesn’t make enough sales, it’s trouble. Likewise, using the line of credit limit for regular operations is a blatant mistake because that means your finances aren’t right. 

That said, here are the situations most suited for a Chase business line of credit:

Cash-Flow Gap Businesses

Some businesses are profitable but still feel short on cash because customers take weeks to pay. Examples include contractors, agencies, wholesalers, and service firms that must manage liabilities long before client invoices are settled. 

A revolving line fits this pattern well: you draw funds to bridge the gap, repay once the invoice clears, and draw again when the next gap appears. Steady, regular use of your approved limit also helps, because Chase may waive the annual fee after the first year when your average usage stays high enough. However, you need at least $100,000 in annual revenue and a FICO score of 660 or higher, so newer or low-revenue businesses may not qualify. 

Seasonal Businesses

Seasonal businesses, such as holiday-driven businesses, often spend money well before it comes in. With a credible line of credit, they can draw funds for those costs, repay from peak-season sales, and pay interest only on what they borrow. 

However, if you barely use the line off-season, your 12-month average usage may fall below the 40% threshold, which is needed for the annual fee waiver. As a result, even if your line sits mostly idle, you could pay a fee of $200 to $750. Hence, seasonal businesses should estimate how much they will borrow across the year and decide whether that fee is worth the flexibility. 

Existing Chase Customers

Chase business line of credit is offered to existing Chase for Business customers, which makes it a natural fit for businesses already banking with Chase. This means the funds move directly from the line into your Chase business checking account through Chase.com, and keeping borrowing and daily banking in one place makes tracking easier. 

Notably, Chase requires majority business ownership and management to have stayed the same for the past two years. If a business has recently changed hands or leadership, it may not qualify yet. 

Owners With Strong Credit and Ability to Take on a Secured Line 

This is a secured line of credit, meaning you’ll pledge collateral, such as business assets, that the lender can claim if you fail to repay. Naturally, this model only works if a business owner is comfortable with pledging valuable assets and also providing a personal guarantee. 

Anyone who owns 20% or more of the business will personally guarantee this revolving debt, so if the business cannot repay, they become responsible. It’s worth mentioning that this aspect triggers a hard inquiry on personal and business credit reports, which can affect your score. If a business owner is uneasy about putting personal finances on the line, they should weigh this risk carefully.

Businesses Planning Phased Growth 

Phased growth means expanding a business in stages. For instance, one might upgrade equipment or hire gradually instead of making one big investment. Luckily, Chase line of credit suits such businesses because it allows them to draw funds as each phase demands, within a credit limit of $10,000 to $500,000. 

Plus, this line’s 5-year draw period, followed by 5 years to repay also gives room to better manage finances. But since its interest rate is variable and follows the Prime rate, borrowing costs can rise during a long expansion, and monthly payments may rise with them.

Conclusion 

A pool of money you can draw from if a cash crunch arrives is surely a breather in this tough business world. But before committing to any financing tool, thoroughly research and understand it so you don’t sign something risky. If you need further help with a line of credit, the ROK Financial experts can spell it out for you. Let’s discuss and get you out of this tight spot. 

FAQs

Is it hard to get a Chase business line of credit?

Yes, if your revenue is under $100,000, your FICO® score is below 660, or your credit shows recent bankruptcies or judgments. No, if you’re established with clean credit. Chase’s underwriting checks all of this, and meeting the requirements doesn’t guarantee approval.

How does it work with multiple owners?

Anyone owning 20% or more is a beneficial owner. However, all owners must provide information, consent to a hard credit inquiry, and personally guarantee the debt in case of default. 

What if I need less than $10,000? 

In that case, you can’t get this line. Since its minimum credit limit is $10,000, Chase suggests a business credit card for smaller needs. Cards also work like revolving credit, so you can borrow, repay and reuse funds as needed.