A business line of credit works differently than a regular term loan. A business line of credit allows you to easily access a preestablished and preauthorized amount of funds when the need arises instead of receiving the entire loan at once.
Funds remain available as long as you do not exceed your established credit limit. Interest is only charged on the amount of funds that you are using at a particular time.
Repayment periods vary depending on the lender.
In most scenarios, the repayment period is typically a weekly, monthly, or a periodic schedule which is set prior to receiving the line of credit authorization.
Thinking that a business line of credit might be the right fit for your business? If so, please apply!
In summary, a small business loan is a financial product offered specifically to a small business, a startup or a potential startup. Small business loans allow existing or startup companies to borrow money from a lender. Several loan breeds exist to help entrepreneurs meet custom goals. Each loan works different and depends on the type of loan.
There are many business loans on the market and here are some examples:
Term Loan - This loan is most like a traditional bank-like loan. You apply, you receive the funding and then pay off the principle plus interest over a set period of time.
Equipment Financing - This funding option is historically an excellent way to supercharge your business. You receive the funds for the equipment upfront and then pay the loan off over the life of the equipment.
Accounts Receivable Financing - If you have large amounts of overdue invoices (ex. Law offices, medical entities or construction companies), you can actually borrow against them. The lender will consider your invoices as collateral. AR financing typically has low rates.
Merchant Cash Advance - You essentially borrow against your future credit card sales and then you pay back a percentage of your daily credit card sales back to the lender. Ideal for salons or storefronts with steady foot traffic.