Is a Short-Term Business Line of Credit the Right Option for you?

Is a Short-Term Business Line of Credit the Right Option for you?

To smoothen uneven flows of cash, a flexible line of credit business solution may be more convenient and cost-effective compared to a bank loan, or a credit card.

A credit line gives you funds that you can use for routine and unanticipated expenditures. You do not have to specify how you will use the funds in order to be approved for a line of credit. You are given a fixed credit amount that is available as and when you need the funds, and you can pay back borrowed money in periodic installments or all at once.

Short-term credit lines have several benefits, but these are not right for all businesses. Before determining the best financing option for your company, you need to consider some key questions.

How Do You Intend to Use the Money?

If you often experience fluctuations in your business’s cash flow and need more funds on short notice to cover costs, a credit line can be a good option.

Conversely, if you are seeking funds to grow your business or make an extremely large purchase, it is perhaps not the best solution. Rates of interest on lines of credit are often higher than those on conventional loans, and this can make big outlays tricky and expensive to repay.

How Good is Your Business Credit History?

Most lenders consider only established businesses having at least 24 months of operating history, in addition to a track record of increasing revenues and profits. For a startup, alternative sources of financing may be more suitable.

See if you Qualify