Can businesses benefit from Business Line of Credit

August 20 14:10 2019

A small business line of credit is a financial tool that shares similarities with a business credit card. Unlike a term loan, a small business line of credit does not provide a lump sum of cash that requires a monthly repayment schedule. Instead, it offers the borrower access to capital up to a certain amount. A business line of credit has grown in acceptance to become one of the most sought-after financing options for small business owners.

Why businesses need a business line of credit

Businesses need funds to operate and expand. However, they do not always have enough cash to meet their financial obligations. One of the funding tools used by businesses is the business line of credit, helping them to handle their cash flow challenges with relative ease.

Some of the uses of business line of credit include:

  • Hiring new employees to meet growing demand for products and services
  • Purchasing a new piece of equipment
  • Opening a new office or expanding to several new locations
  • Purchasing extra inventory to get ready for a busy season

Pros of Getting a Business Line of Credit

  • Flexible Process
  • Interest only on the portion of credit used
  • Lender-borrower relationship
  • Better Business Credit Rating
  • Lower Interest and lower fees than other popular options

Cons of Getting a Business Line of Credit

  • Difficult Application Process
  • Fees and Charges
  • Possible Debt Spiral Situation

Requirements to get a business line of credit

Here are some common requirements for getting a new business line of credit:

  • Collateral
  • Business operating time
  • Financial statements and reports
  • Profit and revenue
  • Guarantee
  • Economic ratios

One of the major characteristics of this funding option is that the
business line of credit rates have been discovered to be relatively low compared with other available options.

Media Contact
Company Name: Funding Box Company
Contact Person: Viola D. Hayes
Email: Send Email
Address:4450 Elmwood Avenue
City: Philadelphia
State: PA
Country: United States

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