The structure of some types of businesses means earning most of the profit all at once and having expenses throughout the year. Real estate investing is one common example. In this line of business, investors need to pay for several expenses upfront before they ever see a dime of profit. Salaries for employees and contractors and office rental are just two examples. If you can relate to this situation, business lines of credit can be the ideal option to keep your cash flow from growing stagnant.
What Are Business Lines of Credit?
Similar to a credit card but often with lower interest rates and other charges, business lines of credit can offer maximum flexibility. You can borrow up to the credit line as many times as necessary and spend the money in any way you see fit. This typically involves taking a cash advance against the account and depositing the money into your own business checking account.
Benefits of Choosing This Business Financing Option
Business lines of credit can offer several advantages over bank loans. While the qualification criteria may be similar, you can use the line of credit multiple times without needing to reapply for a business loan. Depending on the lender’s criteria, you may need to qualify for your business credit line annually. Interest begins to accrue from the date of purchase or cash advance. Except for interest, any amount you pay towards your credit line increases the amount you have available to spend on future purchases and advances.
Business Lines of Credit Are Unsecured
Another potential benefit of business credit lines is that you normally don’t need to put up any collateral. However, some lenders may require this before approving accounts with a high credit limit. This enables you to hold onto your valuable assets without fear of losing them should you experience a financial crisis.
Are business lines of credit right for your company? Schedule a consultation with Commercial Capital Funding to learn more today.