There are many ways to fund a small business, including credit cards, business loans, and out-of-pocket. However, If you are interested in another way of funding a small business, you can get a line of credit. A line of credit is an account that lets you borrow money whenever you need it by writing checks, withdrawing cash, or using a bank card. There is a limit, but like credit cards, you can pay the balance and reuse it.
A personal credit line is similar to a credit card because it is a form of revolving credit. You can use it to write checks, pay with a bank card, or even withdraw cash up to your borrowing limit. As long as you make the minimum monthly payment, you can make as many payments as you want. When you make payments to your line of credit, your balance will go down, and your available credit will be replenished.
The benefit of personal lines of credit, as opposed to other business funding methods, is that personal lines of credit usually have a really good interest rate. The interest rate can be significantly lower than credit cards, with the benefit of being able to utilize them the same way.
Lines of credit can be secured and unsecured. With secured lines of credit, you put up a personal asset as collateral. If you fail to repay the loan properly, the lender can seize the collateral. Unsecured lines of credit are much riskier for lenders and tend to have higher interest rates and fees.
When it comes to funding your business, there are dozens of options. It’s important to pick the best option for your finances and long-term goals. While traditional loans may be very popular options for funding a business, a line of credit can give you a much more flexible business funding solution. If you are in the Denver area and looking for small business funding, you can contact Aspen Commercial Lending to discuss your options.