Take charge of your finances by utilizing all the financing tools available to you. Whether you’re just launching your business or navigating a complicated season for your business, discover how business lines of credit can provide you with the working capital you need to thrive.
A line of credit works by approving your business for a particular credit limit. Think of them as a balance between a business credit card and a business loan. Similar to a credit card, you can use your financing for any business purpose without waiting for approval for a particular expense.
However, like business loans, business lines of credit require an application and credit check to become pre-approved for. This allows your lender to secure their loan and offer more competitive loan terms.
You won’t have to pay interest on your line of credit until it’s disbursed. This allows you to save your financing until you actually need. A business line of credit makes a great safety net as you navigate your industry and grow your business.
Once you take out a loan, you’ll typically begin accruing interest and paying monthly payments. Ask your loan provider about any additional fees, such as an origination fee or one-time fee for accessing your credit.
A good credit score is important for receiving the best rates for your line of credit. However, a line of credit is typically more flexible than a bank loan, so you may still qualify even if your credit score is low. Ask about interest rates, payment plans, and loan limits before choosing the best loan for your business needs.
Some business credit is secured, while other options are unsecured. Applying for a secured line of credit requires businesses to back credit with an asset. A secured line of credit helps your lender ensure they’ll receive their payment, so you can enjoy better loan terms and an easier application.
Unsecured credit lines are typically more difficult to apply for. These loans aren’t backed by any asset, so you’ll need a competitive credit score and reliable financial history in order to access these loans. However, an unsecured line of credit avoids the risks associated with asset-backed loans.
Compare and contrast your loan options to determine the best course for your business. Whether you need a year-round safety net for a particular season or a way to float your working capital through an unexpected expense, find out how business lines of credit can keep your company growing in a competitive market.