If you want a little cushion to have access to funds for your business when you need it, this is a good way to do it. Essentially, a business line of credit provides you with access to a certain amount of money that can be accessed at any time. You simply pay it back within the timeframe that your lender requires, and you’re not limited to how much of your line of credit can be used.
How a Business Line of Credit Works
There are two different kinds of credit that are offered when you decide to go this route. These are formally known as revolving and non-revolving lines of credit. Let’s take a quick look at those.
With a revolving line of credit, you can spend up to the amount that you’re approved for and it won’t expire or close due to non-usage. If you go with a non-revolving line of credit, a lump sum is given and it will close out once it becomes paid in full.
What Makes This an Ideal Form of Business Financing
While this isn’t necessarily the same as a loan that you have to wait for, it comes with some strong advantages. When you get a business line of credit, you can embrace:
· Flexibility on when you can use the line of credit for your business.
Every business can benefit from getting the cash they need, at the times that they need it the most. With a business line of credit, this is exactly the flexibility that you receive. Say goodbye to waiting for approval on a loan, and hello to getting needed funds fast.
· Make cashflow flow smoothly, regardless of what’s happening.
Bills happen, and they keep on coming even if the business might be slow. Not to mention the other things in business that tend to happen. Use your line of credit to pay your bills on time and cover your overhead, then repay it as the cash comes in.
· Use it to start building a relationship with lender(s).
We all know that lenders prefer to do business with those who have developed a solid relationship with them. This is a chance to do that, and potentially increase the number of opportunities that you have in the future with your lender(s).
This is definitely something that any business should consider whether it’s something that they have an immediate need for or not. It’s a solid way to be prepared for anything that may come your way. Bottom line.