If you have just started your own business or are thinking about starting your own company, it’s a good idea to look into opening a business line of credit. Just as Don Gayhardt and his short-term credit can act as a safety net for your business, the same is true of opening a business line of credit, even if you don’t need one just yet. Ready to learn more?
There Might Be Times When You Need Quick Access to Cash
Financial disasters don’t care much for convenience. When such a disaster strikes, you might need immediate access to cash, but it takes time to be approved for and receive a commercial loan. With a business line of credit, you can quickly and easily get exactly the amount you need when you need it. This is sure to bring you great peace of mind.
Low Interest Rate
One of the best things about a business line of credit, as opposed to a credit card, is the fact that you’re likely to have a lower interest rate with a line of credit when compared to the rate of a credit card. While it’s likely that you can get a bank loan with a lower interest rate than a line of credit, that might be offset by the length of time you have to wait on a traditional bank loan.
Better Cash-Flow Management
Something else to think about with a line of credit is the fact that you’ll have a steady flow of cash coming into your business. For instance, there might be times when business is slowing down but you still need working capital. While re-adjusting your business budget is a great idea to get through such times, it still might not be enough. Do your nerves a favor and get a business line of credit now before seasonal slumps and slow times rear their heads.
Better Repayment Terms
You might be more comfortable with the repayment terms offered by a line of credit rather than those associated with a term loan. If your business is just getting started, you could have a difficult time making monthly loan payments, something that can seriously cripple the overall rate of growth for your company. Compare the repayments terms of a line of credit with those of a standard business loan to get an idea of what you’re in store for.
Only Pay Interest on What You Use
When you get a loan, you have to pay interest on the entire amount you’re approved for, even if it turns out you don’t need that total amount. This means that if whatever project you needed the loan for turns out to be less expensive than you originally thought, you still have to pay interest on the total loan amount. With a line of credit, you only have to pay interest on whatever you use. While it’s undoubtedly better to have more than you need when it comes to a loan rather than be approved for less than you require, the opposite isn’t necessarily all that great.
Find Balance Between Needing a Credit Card and a Business Loan
It could be that you find yourself a situation in which you need to pay for something that’s more expensive than what your business credit card can cover, but not so expensive that you need to apply for a bank loan. During such times, having a line of credit could be the sweet spot you require to take care of your business needs.
It’s always best to get ahead of disasters whenever possible. Do yourself and your business a favor and go ahead and apply for a business line of credit now. You’ll be glad you did.