How a Revolving Business Line of Credit Works
Do you know how much financing your business needs? Small businesses require a large amount of working capital to successfully navigate the first few years. Whether you’re seeking aggressive growth or trying to remain on a slow and steady upward trend, it can be difficult to work with the cash on hand. Discover how revolving business lines of credit can give you the access you need to fast, flexible and competitive funding. Don’t let your business fall behind because of low working capital.
What Is a Revolving Line of Business Credit?
Think of your line of credit like a credit card. While there’s a set monthly maximum you can withdraw, you’re not required to use it every month. You may never reach the monthly cap, but you can take out the exact amount of financing you need exactly when you need it.
Once you’ve taken out a portion of the available capital, you’ll begin accruing interest and making payments. Whether you fully pay off your initial credit or not, you can take out more credit. As long as you don’t exceed the maximum amount of credit, you can control the disbursement of your loan to your advantage.
Benefits of Revolving Credit
If your business has a sudden expense, you can’t wait for a bank loan to be approved. Instead, enjoy the fast response time of your business lines of credit. This fast-paced financing is a key reason that small businesses enjoy a line of credit instead of a more long-term loan.
Another benefit is the large financing ceiling. Unlike a business credit card, you can enjoy reasonable interest rates and a generous loan limit for your business.
Choosing Unsecured or Secured Credit
Your business line of credit can be either secured or unsecured. Unsecured lines of credit are typically more difficult to obtain and may come with higher interest rates, but this flexible option allows you to enjoy your financing without putting real estate or equipment as collateral. A secured line of credit, on the other hand, requires collateral to ensure the debt is paid. The advantage of a secured line of credit is that it is typically easy to become approved for, particularly if your small business has a low credit score.
Choose the revolving business lines of credit that work best for your particular situation. Whether you need to borrow a few hundred dollars or more significant investment, choose the credit option that provides you with a safety net an opportunity to improve your cash flow quickly.