Thursday, December 29, 2016

The Right Way to Think About Credit Lines for Business

From SBA:

Access to cash via a line of credit is an important safety net for a small business. Although there are various types of credit lines available, it is the flexibility it provides that makes it so popular among small business owners.

A line of credit is more like cash on demand for a set amount. You can draw funds up to the credit limit set when your company needs it, and you only pay interest on the funds you withdraw. Best of all, every dollar of principle you pay back becomes available for the company to use again.

The important thing to remember is credit lines for businesses have received an overhaul in the past several years. No longer is a credit line being issued just by banks down the road. Today, there are completely different lines of credit issued to businesses from alternative lenders rather than by banks alone. In addition, small business owners can also get credit lines secured by specific types of collateral such as equipment and accounts receivables.

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