Every business needs capital to survive and thrive. But how? Cash can often be in short supply for various reasons. Business lines of credit offer highly useful financial resources.
What are Business Lines of Credit?
A business line of credit is simply arranged borrowing that has a preset borrowing limit. The borrowing can take place at any time and in any amount. The borrower can use the money as needed, up to the limit, pay back the amount used, and then continue borrowing in a repetitive cycle. Business lines of credit can be secured or unsecured, with unsecured lines requiring higher interest rates than secured lines.
The types of business lines of credit include:
• Traditional lines of credit. These come with lower interest rates and closing costs than term loans of a similar size. They typically are acquired at the bank where your business bank account is located.
• Short-term lines of credit. These are generally offered by alternative lenders and are considered as having more risk. Therefore, they come with higher interest rates, lower credit maximums, yet with faster turnaround times and less-stringent application requirements.
• Equipment-backed lines of credit, where a company’s equipment provides the collateral backing.
• Invoice-backed lines of credit (also called accounts receivable financing), where the value and quality of the invoices provide the funding.
Why are Business Lines of Credit Important?
• Ready cash access.
• A solid back-up cash source.
• Flexible use of the funds.
• Time savings. With revolving lines of credit, funds can be accessed and used without re-applying for new loans.
How Can Business Lines of Credit be Used?
They can be useful in many ways including:
• Covering fluctuations in working capital.
• Stocking up for a busy season.
• Launching a new marketing campaign.
• Seizing a new business opportunity.
Seek Expert Financing Assistance
Contact Eagle Bend Capital, based in Westlake, OH for a wide range of commercial capital and financing solutions for business of all sizes. Our extensive portfolio of financing options can provide a great alternative to traditional banks.