Business lines of credit can give your company tremendous financial flexibility, in that they can be used for virtually any business purpose you can imagine. These lines of credit can be secured or unsecured, meaning that they may or may not require some form of collateral in order to obtain the line of credit. Here are some of the main benefits to having business lines of credit.
It’s great to have a business line of credit for use as an emergency fund, especially when some unexpected expense crops up and has to be paid quickly. Emergency funds can also be used when your business is going through a slow period, and you need funding to cover that revenue gap.
Re-using the Line of Credit
As long as you continue to make monthly payments on your outstanding balance, you can continue to use a business line of credit just like you would a credit card. The better you keep your line of credit paid off, the greater outstanding balance you will have available to you for future expenses.
When you have a business line of credit, you’ll be able to make large purchases that would generally exceed the limit on a business credit card. On the other hand, the amount you would use from your business line of credit would probably not be as large as the amount you seek from a business loan.
Better Cash Flow
Your cash flow can be considerably improved when you have a business line of credit available to draw on. When customers are slow-paying, you can use your line of credit to pay off things like your suppliers, payroll, and inventory purchases while waiting for incoming revenue to improve.
Lower Interest Rate
In general, you can expect the interest rate for a business line of credit to be somewhat higher than if you applied for a loan from a bank. However, the interest rates are much lower than they would be if you used a credit card to make purchases or to cover expenses. That makes a business line of credit a more economical option when managing business expenses.
Interested in Applying for Business Lines of Credit?
Once you have a business line of credit, you’ll have tremendous financial flexibility to meet any kind of business expense. Contact us at GP Solutions if you’re interested in applying for a business line of credit for your company.