Small Business Line of Credit
With a line of credit, the business can borrow up to a certain limit and pay interest only on the portion of capital that was borrowed. A line of credit is revolving so the business can keep reusing and repaying the line of credit as often as needed. As long as you make payments on time and you don’t exceed your credit limit, the line of credit remains intact.
The revolving feature of a business line of credit differs from a term loan, which provides a one-time lump sum of cash upfront, repaid over a fixed timeframe. With a line of credit, you can keep reusing and repaying it as often as you’d like without having to reapply for funding. A business is also able to to repay the balance early to save on interest costs or a set installment plan of six to twenty-four months.
The borrowing limit on lines of credit are typically smaller than a term loan or merchant cash advance and are usually unsecured, which means collateral such as real estate or inventory is not required. Larger lines of credit may require collateral.
Flexible business financing is so important because it can help you weather storms and take advantage of unforeseen opportunities by having fast and efficient access to capital when you need it.