Sufficient financing is an integral aspect of small business success and growth. Statistics show that poor cash flow is by far the main reason for the failure of small businesses. Business lines of credit provide strong cash flow to keep your company prosperous. Here are some of the advantages of this form of financing.
Maintain Control of Finances
Business lines of credit offer you more control over your capital than traditional loans. When your application is approved for a traditional loan, you receive a single lump sum that you pay back over time. However, lines of credit are revolving, which means that you have continual access to an approved amount of funds, and as soon as you pay back what you have borrowed, you have access to that amount again.
Keep Interest Rates Low
With business lines of credit, you only pay interest on the amount you borrow. Interest rates are significantly less than those on most credit cards. As long as you make your payments on time, your rates will stay low.
Some traditional loans stipulate how the money is to be spent, but with business lines of credit, you can use the funds you borrow for whatever needs your company has. Lines of credit also generally offer more flexibility in payment options.
Raise Your Credit Score
Making timely payments on business lines of credit can improve your company’s credit score. This can qualify you for a larger traditional loan if your business needs additional funding in the future.
Have Funds on Hand for Emergencies
A business line of credit provides your company with quick access to funding when your company has an immediate need. For instance, if clients are late in paying their bills, vital equipment breaks down, or you need to pay contractors helping out with an urgent project, your business line of credit can assist you in immediately handling the situation.
For more advice on business lines of credit, contact Whitefish Funding.