A small business line of credit is a financial tool that has been likened to a business credit card. A small business line of credit offers the borrower access to capital up to a certain amount, giving businesses access to the capital needed to pay for their expenses. One feature of business line of credit is the “revolving” balance that allows borrowers to the balance from month to month with interest calculated based on the amount drawn.
Factors to consider before Choosing a Business Line of Credit
There is a popular perception that it is relatively easier to apply and get approved for a business line of credit. However, there are several factors to consider by a business owner before deciding on the suitability or otherwise of a business line of credit. The business line of credit requirements and other such factors are carefully considered before taking this funding option.
If used properly, a business line of credit can be extremely beneficial and convenient to businesses, helping them to become and remain successful. Having a good business credit history is one of the strongest tools any business can have when applying for business line of credit, as it provides a stronger ground to leverage on.
Pros of Getting a Business Line Of Credit:
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Flexible Process
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Interest only on the portion of credit used
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Lender-borrower relationship
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Better Business Credit Rating
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Lower Interest and lower fees than other popular options.
Cons of Getting a Business Line Of Credit:
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Difficult Application Process
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Fees and Charges
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Possible Debt Spiral Situation
It can be clearly seen that in addition to cost of borrowing (interest rate) being one of the major considerations for small businesses when getting a loan, there are several other factors to look out for before choosing business line of credit as a funding option.
Media Contact
Company Name: Funding Box Company
Contact Person: Viola D. Hayes
Email: Send Email
Address:4450 Elmwood Avenue
City: Philadelphia
State: PA
Country: United States
Website: fdbox.com