A business line of credit is a flexible financing option that allows businesses to borrow money up to a certain limit and only pay interest on the amount used. It's like having a credit card for your business, but with potentially higher borrowing limits and lower interest rates.
Key Features:
- Credit Limit: The maximum amount you can borrow.
- Revolving Balance: You can borrow, repay, and borrow again up to the credit limit.
- Interest Rates: Typically lower than credit cards, but higher than traditional loans.
- Flexible Use: Funds can be used for various business needs, such as managing cash flow, purchasing inventory, or covering unexpected expenses.
Benefits:
- Quick Access to Funds: Funds are usually available quickly, often within days.
- Only Pay for What You Use: You only pay interest on the amount you borrow, not the entire credit limit.
- Build Business Credit: Regular, on-time repayments can help build your business credit score.