A flexible, revolving business line of credit can help you solve short-term cash flow issues at your company. If urgent business needs come up, you can draw on your line of credit to maintain or grow your business.
Here are some of the major pros of business lines of credit:
- Keeps funding instantly accessible to meet changing business needs: With business lines of credit, you have a financial cushion, up to the credit limit. This gives you the confidence of knowing it’s always ready when you need it for your business use.
- Offers convenience: After initial approval, you won’t need to reapply when a business need or crucial purchase comes up. Your lender may periodically reevaluate your credit score or history, however.
- Secured options are available: Asset-secured lines of credit can provide lower interest rates for your credit line. You could offer business equipment, vehicles, tools, machinery or inventory as collateral to secure your company line of credit.
- Often carries lower interest rates than a credit card: Your lender generally takes into account a combination of your credit score, collateral value, and other indicators of business creditworthiness to evaluate and determine your interest rate for your line of credit. You may be required to pay a commitment fee to keep your line of credit open, even if you’re not currently using it or carrying a balance.
How to Use a Business Line of Credit
If your business is seasonal, you might use your credit for urgent expenses in the slow season. If your company receives an unexpectedly large order, you won’t have to pass. Your line of credit could help you buy the necessary inventory and gain a new, loyal client.
In addition, other financial products can help you meet business needs. Applying for a business loan, for example, may help you get access to a larger amount of financing at a lower interest rate. A loan may be ideal for planned, longer-term business purchases or needs.
Make sure your business is ready for anything. Consider applying for credit now, so you can use it later as needed. Contact the experts at Impact Commercial Capital to discuss business lines of credit and other financial options to suit your business needs.
