Virtually all small businesses in this country depend on having a reliable cash flow to meet their monthly expenses and to work toward business growth. However, steady cash flow can sometimes be difficult to maintain, since customers often pay late and unplanned expenses continually pop up. To manage these situations, a revolving line of credit is the ideal financial support to help a business get through cash shortages.
Since a revolving line of credit operates very much like having a credit card, you can draw on it as long as you have an outstanding balance available, and then pay on it when you have the funds available. Here are some of the advantages of having a revolving line of credit available to your business.
Benefits of a Revolving Line of Credit
There are a number of financial options available to small business owners these days, but a revolving line of credit carries some particular advantages which business owners will find appealing. Firstly, they will usually have a more competitive interest rate, which is often just a couple points above the prime rate for businesses having a good credit history.
A revolving line of credit is also more cost-effective than a traditional loan would be because you are only paying interest on those funds which you have borrowed from your account. By comparison, if you take out a term loan, you would be paying interest on the entire amount all at once. Another advantage of a revolving line of credit is that it can be reused as you make monthly payments to restore the balance. This is not possible with most term loans, and it provides you a continual source of funding, as long as you can maintain a usable balance in your account.
Interested in securing a business line of credit?
Revolving lines of credit can be extremely useful to most businesses. If you’re thinking of applying for one, we’d like to hear from you. Contact us at Affinity Capital Funding, so we can discuss some options for securing a business line of credit for your small business.