Business Line of Credit

Business cycles are unpredictable, as a firm you may need money to satisfy opportunities at short notice, or take care of unforeseen expenses. Many businesses use a ‘business line of credit’ to help alleviate the stresses of short term cash requirements. Unlike a credit card, a business line of credit gives you access to cash without cash advance fees. It is a form of revolving credit that is exclusively available to businesses. A lender will set a limit on the available capital, and you can withdraw on this line of credit as long as you don’t go over the predetermined limit. A payment schedule will be arranged with your lender, and you pay a certain portion of the borrowed cash back in increments. The difference between a business line of credit and traditional business loan is that you don’t have to access the capital if you don’t need to — you only pay back the money that you withdraw from the line of credit. This type of financing has become increasingly popular with many American small businesses.

Should My Business Get a Line of Credit?

Many businesses attempt to keep cash reserves in order to prepare for potential rainy days, but it is also advisable to have a line of credit in case a truly unforeseen circumstance occurs. Lines of credit were specifically designed to help businesses with short-term cash flow problems, as well as with the purchase of inventory and additional seasonal expenses. In essence, a business line of credit is put in place to ensure growth is possible at any stage in a business cycle. This type of finance is particularly good for a company that works in a cyclical industry. Cash flow problems may be a problem in the short term, but a business line of credit will allow you to cover expenses until revenue is increased. One of the main benefits of a business line of credit is that there are no fees associated with unused capital. You only pay for the money that you access within the line of credit — this means there is no real disadvantage in obtaining a business line of credit. If you don’t ever need to satisfy cash flow problems or pay unexpected expenses, you will never have to pay interest on your line of credit. Once the line of credit is established, you can access the capital at any time.

What’s the Process?

Lenders like us are able to extend lines of credit to businesses that do not have extensive credit histories. Larger banks and financial institutions are often averse to granting lines of credit to companies with short histories; we allow you to apply for a line of credit through our online portal — our process is completely automated which enables you to receive approval quicker than through a traditional lender. This is especially advantageous if you need access to funds quickly. But don’t wait until an emergency appears, make sure to apply for a line of credit today in order to ensure you can have access to capital whenever necessary.

Business Line of Credit