The business world requires owners and entrepreneurs to be prepared for unforeseen circumstances that may impact the current business model. Additionally, a line of credit is quite helpful in managing a cyclical or seasonal business’s uneven cash flow.
One of the most innovative ways to prepare for economic upheavals is to secure a Merchant Growth Line of Credit.
Defining a Small Business Line of Credit
A credit line offers business owners the use of a revolving preset sum of money for a predetermined time. In many ways, a line of credit performs more like a credit card than that of a traditional business loan. Instead of a business loan’s lump-sum disbursement at inception, the line Merchant Growth Line of Credit requires interest-only payments on the borrowed funds.
A line of credit offers businesses the ability to access short-term financing – as needed to address business expenses that appear unexpectedly. When the Merchant Growth line of credit is accessed, the payment options are flexible – including an interest-only option based on the outstanding balance of the business line of credit. The principal amounts repaid are available to be borrowed again until the line is closed.
In addition, a small business line of credit generally is approvable in 24 to 48 hours, needing only a basic application that can be completed conveniently online. And, once the account is open and has been managed according to the terms of the credit line, many lenders can modify the existing line of credit to provide financing that grows as the business grows.
Using a Small Business Line of Credit
The primary purpose of opening a line of credit is to obtain easy access to short-term financing options. Businesses often use these monies to support financing for operational expenses like supplies and payroll or increasing inventory. Cyclical companies often rely on an unsecured line of credit as a source of off-season working capital.
Qualifying for a Line of Credit
Many lenders will establish lending guidelines for each business line of credit. Typically, these credit lending requirements may include, in part –
- The location of the business
- Minimum monthly business revenue
- Minimum length of time in business
- Minimum credit score requirements
- Type of business seeking financing
The Bottom-Line
A business credit line offers business owners viable financial protection for business operations by providing quick and easy access to available funds, with only a minimal upfront commitment by the business owner. With reusable funds, the line of credit can be used over and over again as business needs arise and evolve. Is it illegal to use a business credit card for personal use? Find out at Daily Prosper.
