What is a Business Line of Credit?

A Business Line of Credit is a type of loan which is revolving. A  fixed amount of capital is allowed to access the small business owners to meet short-term business needs.  Many business owners will agree that there are many unexpected emergencies faced by the companies. There may be late invoice payments, urgent expenses caused due to various reasons that can hinder the cash flow of the company.

If the business owners get access to the funds at the time of emergency, the business can thrive in the most difficult situations. In Business financing, there are many different options to help the owners. One of them is the Business Line of Credit.


Business Line of Credit is helpful to business owners in many ways.Ifcompared to the traditional term loans, a Business line of credit has a low interest rate. Whereas, if you take the traditional loan the interest rate is high if you fail to repay on time. In traditional term loans, you need to pay interest constantly for the entire period of repayment. But in the Business Line of Credit, you pay interest only on the amount that you have withdrawn.

But it must be remembered that a Business Line of Credit is beneficial only when there are repeated cash flow issues.  The traditional term loan is good for a specific purchase considering the long-term investment.

Sustain your Business with Line of Credit

This option is popular among business owners as it gives flexible financing options. As and when the expenses arise in the business, there is the cash flow available instantly. This helps business owners to sustain their business in difficult situations. Business monthly income and expenses vary every time. Thus, getting access to funding in need is appreciated by the businesses. The interest rate is also low as compared to credit cards.

A variety of expenses are covered in the BusinesslineofCredit. It can be regarding expenses, new hires in the office, tax payments, and unexpected emergencies.

There are 2 types of credits. One is secured where you need to give some type of collateral in case you fail to repay the amount. Banks and Credit cards give such types of secured loans.

In an unsecured type, there is no need for collateral thus making it ideal for business. There is no risk in such a type of credit.

Eligibility for getting Business Line of Credit

The business that is less- established can opt for short-term lines of credit. Whereas the established ones can opt for medium-term lines of credit. The funds will be available depending upon the credibility of the businesses. The interest rate and the duration and terms of repayment will depend upon the revenue of the business, its history, and other factors too.

Small Business owners must strive hard to increase their value in the market with consistent efforts. In case if their company faces any unforeseen emergencies, being eligible to get access to the business funds on time is what matters the most!

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