Getting credit for business expenses may be the right decision when your small business needs cash to meet its needs. A business loan comes with in-built flexibility, as the discussion below will reveal.
What is a Business Line of Credit?
A business line of credit is a business loan from which you can draw money as long as you don’t exceed the limit approved. You only pay interest on the money used from the total approved, and what you repay immediately becomes available for you to borrow again when the need arises.
It is sort of like a credit card, except the interest is lower, and the amount you can access is much higher. It is ideal for short-term business needs, such as paying salaries while waiting on clients to clear their invoices.
Considerations Before Applying for a Business Line of Credit
First, know the requirements. Each lender has their own conditions. They can include your personal credit rating, how long the business has been operating, your annual business turnover, and cash flow.
Find out whether the credit for business is secured or unsecured. Each comes with its benefits and drawbacks. For example, unsecured business lines of credit may attract a higher interest rate.
Also, consider the terms of the facility before signing up for a line of business credit. For example, will you be penalized for repaying the loan early? What happens when a payment is late? How soon will the money be available?
Above all, establish your business needs before shopping around for a provider.
Considerations Before Applying for a Business Line of Credit
If you want your business to be prepared for the unexpected, or you want to get out of a temporary liquidity shortage, reach out to Advance Funding Partners. We will discuss your needs and recommend your most appropriate loan product.
