Are you looking for a Line of Credit?
Are you looking for a Line of Credit?
A line of credit acts as a working capital reserve when your business needs to up its cash flow. Borrow what you need, when you need it, without a new application every time.
Loan Overview
It’s not always easy to earn consistent returns month after month throughout the year. Retail and recreational businesses might realize most of their annual sales in just one quarter. To stay operational, however, the business has to meet expenses all year long. These ups and downs often make financial planning a challenge. A line of credit works to smooth out the rollercoaster and prepare for unpredictability. The business can borrow from a secured or unsecured line whenever it needs to, as long as borrowing is under the allotted credit limit. When sales are up, the business can pay down the balance on the line to free up credit for the future. As cash flow starts to slow down, the business can tap into the line again without having to make a second loan application.
These ups and downs often make financial planning a challenge. A line of credit works to smooth out the rollercoaster and prepare for unpredictability. The business can borrow from a secured or unsecured line whenever it needs to, as long as borrowing is under the allotted credit limit. When sales are up, the business can pay down the balance on the line to free up credit for the future. As cash flow starts to slow down, the business can tap into the line again without having to make a second loan application.
While secured and unsecured are the most common types of credit lines, there are also non-revolving and no-recourse lines available from certain lenders. Non-revolving lines don’t renew when payments are put into the account. The business can borrow as usual, but the account closes once the credit limit has been reached. No-recourse lines of credit keep business and personal assets protected in the event of a default. The lender can seize the collateral originally put up to secure the loan, but can’t seek further assets.
Secured Lines
A secured line of credit uses a company’s assets to secure the loan against default. You’ll get a percentage of that asset’s worth in the form of a credit account. Use your card or online access to take funds from the account when you need them. Repay funds to free up the balance.
Unsecured Lines
Non-recourse lines
ADVANTAGES
Borrow as needed, without a second loan application.
Smooth out seasonal revenue cycles.
Interest is only charged when you have a balance.
Lower interest rates and higher limits than most credit cards.
DIS-ADVANTAGES
Can have high-interest rates.
Limits might be lower than an installment loan.
Not ideal for real estate purchases or construction projects.