Business Lines of Credit
Business lines of credit are primarily used to help with cash flow, to prepare for seasonal business expenses, bridge gaps in cash, or cover unexpected expenses. Unlike traditional small business loans that require monthly payments plus interest, business lines of credit offer business owners the option of taking money out or leaving the line untouched. This kind of flexibility means you do not have to worry about paying back the loan whether you use it or not. Traditional loans require repayment whether you use the borrowed funds or not, whereas business lines of credit only require minimum payments when you use the money.
This may sound like a business credit card. While the two products are similar, business lines of credit have some definite advantages. For one, business lines of credit often have higher limits than credit cards. Borrowing up to the limit of a credit card can have adverse effects on your credit score and interest payments, whereas a business line of credit does not come with the same downsides.
Qualifying for a business line of credit can be easier than a business credit card, too. Credit cards have stricter requirements to qualify, whereas business lines of credit do not require a high credit score, high annual revenue, or more than one year in business before granting access to the funds.
Whereas business lines of credit are fantastic tools, signing up for one without the help of an expert financial advisor such as Coral Capital Group can be a trap. Business lines of credit are often easier to find than other forms of financing, but predatory lenders can take advantage of the unknowing business owner. Contact Coral Capital Group to find out more about the best uses of business lines of credit and to find out if it is the right fit for you and your company needs.