Many small businesses have difficulty handling their cash flow. One reason for this potentially damaging defect is a lack of awareness of where to find quick and inexpensive funding. Lines of credit allow you to easily obtain monetary advances, often without the need for collateral.
Here are some of the advantages of this form of financing.
Control Your Capital
When you take out traditional loans, you receive a specified sum and have to pay back the entire amount with interest within the agreed-upon time limit. Lines of credit, on the other hand, allow you continual access to funds for an indefinite period of time, and you only pay interest on the amount you use. Interest rates are generally lower than those of credit cards. As soon as you repay the amounts you borrow, you regain access to those funds.
Meet Your Needs
Lines of credit are there to handle emergencies whenever you need them. For instance, you can use your line of credit to make up for shortfalls due to late-paying customers, repair or replace damaged equipment, or pay off contractors who help you with special projects. Having this backup in place allows you to focus on pleasing your customers and marketing your products or services.
Unlike some loans, such as those offered by the U.S. Small Business Administration, the funds in lines of credit are available to you to use in whatever way your company needs. Additionally, lines of credit offer you more flexible repayment choices. If times are tight, you can make minimum payments, but when your business prospers, you can pay off more.
Increase Your Credit Score
With lines of credit, if you maintain a low balance and handle your payments in a timely manner, you can improve your credit score. This allows you access to other funding possibilities in the long term.
For more advice on lines of credit and other funding options, look to Black Wolf Capital Group.