Has your business thought about applying for a line of credit to help bolster company finances? Before you send in your application, there are some key facts you should know about the main upsides of this type of financing. Unlike lump-sum traditional loans, revolving lines of credit can allow businesses greater independence and flexibility when it comes to drawing out necessary funds and controlling financial issues. If you’re interested in this option, take a look at some of its most common benefits.
You Can Access Necessary Funds at the Drop of a Hat
One of the top reasons so many business owners choose to get credit lines is because it gives you funds that you can draw on at the drop of a hat. You don’t have to go through the process of applying for a bank loan when you need to cover a large expense – instead, you can simply tap your company’s line of credit. This provides a key safety net that can prove invaluable to many businesses.
You May Be Able To Use Your Credit for Different Essential Assets
Unlike many other types of business financing, credit lines usually do not restrict the types of assets that can be purchased using its funds. This means that your company can lean on the credit line to acquire different essential assets for the business. These assets could include, but are not limited to:
- Equipment
- Merchandise and inventory
- Employee supplies
- Real estate
- Company first-aid kits
You May Have To Balance Benefits With Associated Fees and Interest
Although credit lines have numerous upsides, it’s important to check the fees and interest rates of any given credit line you’re considering before signing up for it. Fees and interest rates can vary widely. For instance, your business may opt to avoid credit lines that come with:
- Lower credit limits than some conventional loans
- Commitment fees or yearly maintenance fees
- Higher interest rates than some traditional loans
For many businesses, having access to revolving lines of credit can be a critical safety net and even a lifesaver in times of financial duress. If your company has been looking for a financing option that doesn’t lock you into monthly payments, lets you access much-needed funds at your will, allows you plenty of free range for purchasing different assets and so on, you may want to look into applying for a line of credit. Check out the fees and interest rates associated with the credit lines you’re interested in to make sure you’re maximizing your benefits.