Every business needs to remain nimble. Conditions change. Opportunities arise. Cash flow zigs — and then zags. When you need to access cash for the unexpected or to finance ongoing expenses like inventory, a business line of credit can be the perfect solution.
What is a business line of credit?
A business line of credit is a type of business loan with built-in flexibility. It offers a set limit you can draw from, and you pay interest on only the amount you use. When you pay off your principal balance, your available balance goes back to your approved business line of credit amount. Much like credit cards, it operates as a revolving line of credit — use, pay, repeat.
Despite the many features business credit cards and lines of credit share, there are some important differences. For one, most business lines of credit offer lower interest rates than their business credit card counterparts do due to the line being secured.
The reasons business owners seek out lines of credit are diverse.