Why You Should Have a Business Line of Credit

Running a business is hard work, and it can be unpredictable, too. Expenses can pop up when you least expect them, and your customers don’t always pay on time. This combination of factors can lead to a cash crunch if you haven’t prepared yourself with a way to access money quickly.

Fortunately, with a business line of credit, you can rest assured that the capital you need is at your fingertips right when you need it. Here are just a few of the many advantages of securing a line of credit.

Only Pay When You Need To

Unlike traditional loans which give you a lump sum upfront on which you must make regular payments, lines of credit are only used when you need them. You will only be charged interest and make payments on the money you take out. Plus, you can borrow against it over and over, essentially serving as your own lender.

Enjoy More Reasonable Terms

Another advantage of having a line of credit is that it is typically more affordable than other types of loans, and the interest rate is usually lower than a credit card. Of course, the exact terms will depend on your individual circumstances such as your credit score and other factors, but in general this is a relatively affordable way to access credit.

Finance Those In-Between Purchases

Sometimes you need to buy something with a price that’s over your credit card limit but too low to consider taking out a traditional loan. Those in-between purchases are ideal for lines of credit. Just make sure you don’t exceed the maximum and always pay the balance by the deadline to avoid costly fees.

Keep in mind that the best way to leverage a line of credit is through financing short-term rather than long-term activities. For example, funding a promotional marketing push is a potentially wise investment of funds from your credit line whereas making a large capital investment might be a better fit for a traditional term loan.

Use the Money However You Choose

With a line of credit, you don’t need to make a business case to justify using the money. It’s yours to spend when you need to and how you want to. From purchasing supplies to covering payroll to putting gas in your company truck, you get to decide where the funds go.

Your business is important to you and keeping your cash flow healthy is important to your business. Put yourself in control of your finances when the unexpected arises with a business line of credit. Your bottom line will thank you.

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