A business line of credit is basically a credit account available for you to use, or not use, at your discretion. If you need it, it’s there for you, and you only owe interest on the funds you actually use.
Think of it like a new pair of snow shoes. If you’re walking on the street, you can keep them in your bag, fresh and clean. If you come across a little snow, you might put them on for a few minutes to get where you want to go faster. And if you somehow find yourself in deep – uh – snow, you can fall back on them to keep you afloat.
That sounds more like a credit card than snow shoes…
If you want to be a spoilsport and ruin everyone’s fun, then sure, it’s kind of like a credit card. But more like a credit card had a baby with a bank account.
Anyway, back to the topic!
Business lines of credits are a multi-purpose solution to many different issues. However, they aren’t for everyone. For example:
- A line of credit may require collateral in some cases
- You’ll have higher interest rates if you credit score is low
- You’ll sometimes need to personally guarantee your business line of credit
On the other hand, there are a lot of upsides:
- You’ll only pay interest on funds withdrawn
- You can get a business line of credit for any amount between $1,000 and $500,000
- You can use your line of credit for just about anything your business may need, such as buying equipment, paying employees, purchasing a building , or paying off debts – anything
Anything for your business, yes. You can’t just go around buying zebras. Unless your business is a zoo, of course. In that case, go crazy.
I don’t want a zebra…
Who are you, anyway? Captain Buzzkill? Of course you want a zebra. And hey, did we mention it only takes one to two weeks to get approved for a business line of credit? You could have a whole zeal of zebras running around in no time!
Yer darn tootin’.