Trust us when we say you are not the only one struggling with the customers showing lethargy to clear out the pending. Pending invoices halt the cash flow, leading to a delay in business management and renovation. Consistent incoming of money is eminent for the success of any small business, be it a home-based business or construction business. If your business needs access to funds with flexible payments and complete liberty to utilize the loan, a Business Line of Credit is the most convenient funding option for you. It allows the small business owner to withdraw money up to a certain amount, and the borrower pays interest on the amount withdrawn. Furthermore, having a stellar credit score and a remarkable credit score isn’t necessary to apply for a Business Line of Credit. With these and a wide range of other benefits, you have a reason to apply for LOC and have access to the pool of funds whenever you need.
Loan shopping can be exhausting, looking at dozens of loan types is confusing if the borrower is not clear about his or her financial needs. To simplify this experience, we jot down six reasons how a business line of credit can benefit your small business.
- Unsecured Line of Credit
Business Line of Credit is an uncollateralized loan; the borrower doesn’t put any valuable asset at risk. On the other hand, the majority are collateralized loans; the lenders demand the borrower must offer some valuable asset, for example, a home or car. In case of any default in the payment, the lender is allowed by the law to seize your assets. Luckily, an unsecured line of credit isn’t risky for the borrower. With little to no risk involved, a small business owner can utilize LOC (Line of Credit) in various ways.
- Aids in achieving short-term goals
The whole idea behind a Business Line of Credit is to offer quick and fast funding to the business managers before the problem presents itself. The loan amount rests in their account for them to access to cover advertising, marketing, and renovation expenses. As a restaurant business owner, the line of credit provides funds to cover expenses involved in purchasing inventory and food ingredients. But if you need high functioning machines such as a walk-in refrigerator or commercial oven, applying for equipment financing is a better option! So, achieve short-term goals at an affordable rate using a Business Line of Credit.
- Lower Interest Rate
Though the final APR and interest rate depends on the borrower’s creditworthiness and small business loan type, a line of credit comes with an affordable rate, especially for startup owners. A business line of credit is affordable, and it provides financial stability to small business owners.
- Improve the Credit Score
Making repayments on time improves the business credit score of the borrowers, and it leaves a positive impact on the lender. Building a rapport and creating a positive image on the lender will help you get an increased loan amount in the future. In addition to this, if the borrower succeeds in making the repayments before the deadline, the lender will share the improvement to the credit bureaus. Due to its flexible repayment schedule, this is one of the most convenient funding options for the small business options.
- No need to pay interest on the total amount
Apart from being an unsecured funding option with flexible repayment terms and low-interest rate, a business line of credit allows the borrower to pay interest on the amount used by the borrower. For example, a lender approves you for a $15,000 loan; you withdraw $5,000 to purchase inventory. On paying back $5,000 with an interest your business account will be charged up to full $15,000 again. Consequently, the borrower is paying interest on $5,000 not complete $15,000. Making it a modest funding option and reasonable funding experience.
- Flexibility and Availability
While running a business, surprising and unexpected expenses are inevitable! Line of credit offers revolving credit giving you access to a pool of funds that you can dive in whenever you need. In comparison to the other term loan, you don’t need to have to apply for one again and again. Now that you have total control over the funds, you can use it more efficiently and effectively.
Lastly, all the perks of business lines of credit are in front of you; head over to our website and take benefit of these funding options and cover financial needs. For more information and tips, follow us on Facebook (@Onlinecheck) and Twitter (@Onlinecheck). If you have any query, our financial advisors can get back to you.