Virtually all businesses would benefit from having a business line of credit available to them, because it can provide extraordinary flexibility, and because it can help you meet operating expenses, as well as to take advantage of unexpected business opportunities.
How a Business Line of Credit Works
In effect, a business line of credit works very much as a business credit card would. You would start out with a line of credit limit which you could not exceed, for example, $10,000. You could use any portion of that amount on any business purpose whatsoever. Then you would be obliged to pay back that borrowed amount each month, and you would have to pay interest on the amount which was borrowed. If you continue to replenish the account balance, you would also continue to have the use of the entire credit limit available to you.
Advantages of a Business Line of Credit
Business owners who have seasonal operations would benefit greatly by having a line of credit because it can help smooth out those months where incoming revenue slows down. You could meet expenses each month until you reach the seasonal point again where sales pick up, and incoming revenue increases. If you faithfully pay back any amount that you’ve borrowed each month, you will be building up a solid business credit history which will be reflected in your credit report. That in turn, could make you eligible for future loans that you might want to apply for.
When you have extra working capital available to you, such as from a business line of credit, you’ll be better able to take advantage of limited-time opportunities, such as discounts offered by your suppliers. Another really significant advantage of a business line of credit is that you only have to pay back what you use, and you only pay interest on the amount you’ve used. You can pay off any outstanding balance whenever you want, and then have your entire credit limit available to you for future usage.
Interested in a Business Line of Credit?
Most small businesses would benefit by having a business line of credit, because of the tremendous financial flexibility they provide. Contact us at Coastal Commercial Lending, so we can discuss eligibility for a business line of credit.