How Long Does It Take to Get Approved for a Line of Credit?

How long it takes to get approved for a line of credit depends on what kind of line of credit it is.

For a regular credit card, often the individual will be approved in minutes. This is due to the fact that approval is based on an algorithm and inputs from the user.

Home equity lines of credit, or HELOCs, are usually approved within 2 – 6 weeks.

A business line of credit can take anywhere between a few weeks to a few months.

This is due to the fact that business lines of credit are often “collateralized,” meaning the loan is given to the business with the business’s assets used as collateral.

Assigning the appropriate valuation to the assets and submitting proper documentation, such as tax returns, a balance sheet, and independent valuations of assets can take quite a bit of time.

In general, collateralized loans have a much lower interest rate than non-collateralized loans.

Read more below on what exactly a line of credit is:

How Long Does It Take to Get Approved for a Line of Credit FAQs

A line of credit is money lent to an individual or business. If a line of credit is revolving, then the line of credit will replenish as the borrower pays back money borrowed.
The acronym LOC stands for Line of Credit.
A revolving line of credit is one which replenishes when the loan is paid off. An example of this is a credit card. A non-revolving line of credit closes once the loan is paid off, such as a student loan.
A loan is typically a lump sum whereas a line of credit is typically revolving which allows for the borrower to draw, repay, and again draw as needed.

Line of Credit (LOC) Definition

What Is a Line of Credit and How Does it Work? Revolving vs Non-Revolving

Lines of credit will either remain open, or will close, once the loan has been repaid.

Revolving lines of credit are considered “revolving”because an individual’s credit is replenished when some or all of the outstanding debt has been paid off.

In contrast, a non-revolving line of credit is closed once the account is fully paid off, such as a student loan or mortgage.

Non-revolving credit usually has a lower interest rate.

How does a Line of Credit Work? Secured vs Unsecured

Loans may be unsecured loans, or secured by collateral.

A home equity loan is an example of a collateralized loan, whereby the home is the collateral and will be claimed by the creditor in the event of a default on the loan.

Credit card loans are almost always unsecured, which causes creditors to take on more risk and is why credit card interest rates are generally higher and the borrowing limits are generally lower than secured loans.

Understanding a Credit Line FAQs