Business owners often turn to loans to help their business grow or gain sufficient capital, but there are alternative forms of financing available. Lines of credit, for example, are an easy-to-use method of quick financing. Whether you need money in an emergency or want to have regular access to funding, a line of credit can make running your business much easier.

What Are They?

A line of credit is a type of flexible loan. It functions similarly to a credit card, where you have a cap on the amount of money you can borrow but are free to use and pay off as you wish. Like most credit cards and loans, interest is charged based on the amount of money borrowed, and because the interest rate is variable, it can be difficult to predict how much the line of credit will cost. Because of its function, it’s better suited for regular use rather than one-time purchases of business assets. For example, you can use lines of credit to boost your cash flow for the month or balance out income to match expenses during a slow quarter.

Who Can Use Them?

Generally, the most popular reason is to have access to short-term funding. You don’t go through the process of applying for a loan for a specific purpose. Instead, you’re allotted a certain amount of credit for whatever business purpose you desire. Lines of credit are particularly useful for businesses that have unpredictable or irregular income. Such as companies within the healthcare industry or other businesses that receive late payments to their invoices. A line of credit can smooth out those inconsistencies, making it easier for businesses to stay on track.

What Are the Benefits?

This type of financing offers a high degree of flexibility and accessibility. The funds are available whenever you need them, so you don’t have to apply for several loans over and over. This financing is quick and painless, and the funds are available for immediate use. This also gives you greater control over how much you spend and greater variability in your repayment options. Additionally, there’s a massive benefit to using lines of credit: improving your credit score. So long as you keep your balance low and make payments on time, a line of credit can help your credit health. 

How Much Can You Borrow?

Unsecured lines can be scaled to fit the needs of any business. To learn more about unsecured lines of credit, contact the experts at Charis Commercial Capital.