In many respects, business lines of credit are very similar to credit cards which can be used whenever you need them. A revolving line of credit will have a credit limit which will always be there, whether you use it or not, and when you do use it, you can restore that credit amount by making monthly payments. Here are some of the advantages which accrue to business owners who obtain lines of credit.
React to Business Opportunities
Quite frequently in business, opportunities arise which have a very limited time window, and which you have to act quickly upon in order to take advantage. With a business line of credit, you’ll be able to seize the moment, and use funding from your account to cash in on that opportunity before it disappears.
Pay Interest on Amounts You Use
With a business line of credit, you only end up paying interest on the amount of your credit line which you have actually used. Your credit limit might be $5000, but if you have only withdrawn $500 from that account, you would only pay interest on the $500. You’ll also have the opportunity to pay off an outstanding balance at any point in time, thereby making the entire credit limit once again available.
Smooth Out Cash Flow
Many small businesses use lines of credit for the purpose of smoothing out cash flow, especially if their business tends to be seasonal in nature. If you make most of your profits during holiday time for instance, a line of credit can help you survive through the off-season until you once again experience a surge in sales at that special time of year.
Build Up Your Business Credit
When you withdraw amounts from your lines of credit and then repay them faithfully each month, you will be building up your business credit history. This in turn can make you eligible for business loans from other sources, and can establish your business as a good credit risk.
Interested in Obtaining Lines of Credit for Your Business?
With a business line of credit, your small business will have the flexibility you need to manage your business expenses more efficiently, and to maintain positive cash flow. Contact us at Aspen Commercial Lending if you’re interested in applying for business lines of credit.