Running a small business can be an exciting experience that provides many opportunities for learning and growth, however, it can also come along with its share of stress, as well. One of the main aspects of getting a business off of the ground that causes stress is finding the right way to finance it. The good news is, though, that with a little effort and research it can be easy to find the right financial path for you and your business.

What Is a Line of Credit?

A line of credit is a kind of loan that is also a revolving form of credit, much like a credit card. When you apply for lines of credit your credit worthiness will be assessed, and then, if approved, you will be provided with a credit line up to a predetermined amount. Once you have your credit line, you can withdraw as much or as little as you need to from it, up to your credit limit. You will then be expected to pay back whatever you have withdrawn with interest. With lines of credit, there are generally two main kinds available. One is a secured line, which typically involves some kind of collateral, like business equipment. The other is an unsecured line, which does not involve collateral, and can therefore be a little more difficult to obtain.

Who Is it Good for?

There are many situations in which lines of credit can be beneficial. They can be particularly helpful for businesses that are just starting out, and need some extra cash flow to cover regularly occurring business expenses and keep things running smoothly until they are more established.They can also be great for those that simply want some more financial flexibility than a traditional loan might offer, or who may simply want to have access to emergency funds when they need them quickly. Lines of credit can also be helpful for seasonal businesses, or businesses that don’t otherwise have a regular cash flow all year round.

The Bottom Line

Running or launching a small business can be exciting, but it can come along with its share of stress, too. One thing that often causes stress when starting a business is finding the right way to finance your business. The good news is, though, that it can be easy to find the right kind of funding for you, with a little effort and research.