Line of Credit versus Business Loan
A line of credit may provide a few major advantages over a business loan. Having a line of credit business option is a fine way to access cash whenever required, which can be important to your business’s success.
Business lines of credit also provide you with flexibility with regards to monthly payments. Usually, you can pay the monthly minimum payment, the whole balance, or an amount that lies between the two. However, it needs bearing in mind that you will need to periodically pay interest on the outstanding balance that you carry.
A business loan can serve a significant purpose. It can potentially be more cost-effective than a line of credit, especially if you know just how much you require for a project. With your loan expenses known in advance, a business loan can make you able to budget for monthly payments and total repayment costs. If you do make those planned payments, you can keep unexpected interest from building beyond your capacity to pay.
It is best to consider a line of credit when you require ongoing access to cash and payment flexibility. Consider the other option when you know just how much money you have to borrow, and want fixed repayment costs.