A line of credit can be a life-line for a small business if used properly. Similar to a credit card, a small business line of credit allows the business owner to draw from a pre-determined amount when needed rather than borrowing funds in one lump sum. The borrower pays the interest only on the amounts borrowed. Many lenders currently offer small business lines of credit, including banks, credit unions, and online lenders. Be sure to familiarize yourself with the lender’s approval guidelines, the cost of borrowing, collateral requirements, and loan limits. Put yourself in the best position by applying while your business is strong and your personal credit score is favorable.
Key Takeaways:
- Allows business owner to establish a pre-determined fund amount or credit limit to withdraw if needed.
- Getting a line of credit (LOC) involves understanding your needs, when you need it, checking approval guidelines, and know the cost of borrowing.
- Decide whether you want to go with a small bank or a traditional bank, or use an online lender, and know the best time to apply.
“Learning how to use a business line of credit can be a life-line for a small business and may even be the difference between success and failure”
Read more: http://smallbizclub.com/finance/working-with-lenders/use-small-business-line-credit/