Does your business struggle with stable cash flow? When sales dip, equipment needs repairs, and customers delay payments, a business can have problems with cash flow. Every business, large or small, needs a cash cushion to pay for unexpected business opportunities and expenses. To lower the risk of bankruptcy, you need quick access to funds whenever you need them. Fortunately, a business line of credit Long Island can help you with that.
What is a Business Line of Credit and What Does It Offer?
If you know how a credit card works, then you already have an idea on how a line of credit functions. A business line of credit offers flexibility that a traditional business loan cannot provide.
Once lenders approve your line of credit, they assign you with a predetermined credit limit where you can withdraw funds as needed. You only have to repay the amount you’ve withdrawn, plus the interest, within the agreed repayment period.
Since a line of credit is usually revolving, you can pay back the loan and access the funds repeatedly as long as you don’t surpass your credit limit. Generally, lenders don’t charge a prepayment fee on a line of credit, so you have the option to pay back the loan earlier to save on interest.
How Your Business Can Benefit from a Line of Credit
Compared to more traditional forms of business financing, a business line of credit offers certain advantages that could benefit your business. Here are four reasons why every business should have a business line of credit:
1. Greater Approval Rates
It’s easier to qualify for a business line of credit compared to traditional loans. There are financial institutions that accept applicants with poor credit, so a business line of credit is ideal for business owners who don’t qualify for regular loans. If you pay on time, a line of credit is also a great way to improve your credit score.
2. More Control
A business line of credit allows you to use the funds in any way you like as long as it benefits your business. Business owners commonly use it to cover operating costs, bridge cash flow gaps, or pay for unexpected business expenses. You don’t need to specify how you’re going to use the loan in order to secure the cash.
Compared to short-term loans of similar size, a business line of credit typically charges lower interest rates. However, keep in mind that rates may vary based on the stability of your cash flow, credit history, and other financial factors.
4. Added Flexibility
In term loans, business owners are given a lump sum of cash which they need to repay regularly. With a business line of credit, you can use the funds only when you need them.
Business Line of Credit Long Island
A business line of credit Long Island gives business owners like you a fighting chance to access funds ASAP. That’s also how SMB Compass helps you secure a business line of credit.