Every business occasionally has cash flow struggles. What separates businesses that succeed from those that ultimately fail is how they manage times of low revenue without getting into a continuous debt cycle. If you operate a new small business or work independently, it can be difficult to obtain a traditional business loan from a bank. Banks typically have strict criteria and require extensive documentation in addition to only working with established businesses. That is no reason to become discouraged, however. Many alternative financing options exist, including business lines of credit.

Understanding Business Lines of Credit

Business line of credit work are somewhat similar to a revolving credit card. You receive a credit card and are free to borrow up to the credit line as often as necessary. Making payments against your balance increases the amount of credit available to your business.

Depending on the lender’s terms and whether you keep the business lines of credit in good standing, you may be able to keep the account open indefinitely. This type of flexibility means you don’t have to apply for a new loan every time you run into a cash flow challenge.

Other Benefits to Consider

Business credit cards typically come with a higher interest rate than lines of credit. If your personal credit history is good, you could potentially receive an interest rate just a few points higher than the current prime rate.

Since you only draw money from the account when needed, you’re not stuck making payments when you’re not directly benefitting from the loan proceeds. Business credit lines allow you to draw out cash without a hefty cash advance fee. That means you can take advantage of cash discount offers as you continue to grow your business.

Are you ready to apply for a line of credit for your business or want to hear more about other alternative financing options? Feel free to contact Topfund Capital today for immediate assistance.