Mon. Sep 16th, 2019

What is Line of Credit and Why Does Your Small Business Need One?

2 min read
small business line of credit

Running an operation intensive business demands regular capital outflow to manage small and big expenses. This is especially true for the small businesses like those operating in retail, essential services, and commodities to manage their regular cash flow.

Without the access to cash in hand, these businesses experience a disruption in their sales, overall profits, and sometimes even face losses.

So, if you are running an operation intensive business, what can be your option? The simple answer is an unsecured line-of-credit. Let us understand it in detail.

What is Small Business Line of Credit?

Line of credit for small businesses means a secured or an unsecured loan which is available instantly to the business for an interest rate to meet urgent operational expenses. A secured line of credit means that it has been secured by collateral, and an unsecured line of credit has no collateral behind it.

Depending upon the history of your small business, its cash flow and sales figures, you can avail it via banks or alternative lending institutions. Typically, an unsecured line of credit for small business owners requires strict eligibility and higher interest rates because of lack of collateral.

Benefits of Small Business Line of Credit

Instant Access to Money:

Small business owners can manage their daily operational expenses without worry on a rainy day.

Quick Transfer:

Be it a secured or unsecured line of credit for your small business, the cash transfer is instant. You can even withdraw it via smartcard if the lender provides that facility.

Large Credit Limit:

Small business lines of credit allow for generous credit limit to adequately and comfortably meet your daily business running requirements.

Flexible Repayment:

Unlike business loans where you are required to pay monthly EMIs, credit line for your small business allows for flexible repayments. You can pay the minimum outstanding amount, pay the full amount, or even pay more to use the fund again.

Solid Credit Score:

An excellent benefit that small business line of credit offers is building a separate credit score for your business. Your business will have its individual credit history which will be separate from yours.

With the above-mentioned benefits, a line of credit will streamline your operational expenses in addition to building a great financial base for your business. Power your company today with a suitable line of credit!

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