By: First Union
How Small Businesses Can Benefit From a Line of Credit 2022
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The need for funds to keep your business running smoothly is a common one for many company owners. And yet for smaller businesses, especially newer ones, finding this funding isn't always the easiest thing to do. Banks are hesitant to lend to such entities. A recent study showed that less than 30% of small business owners were able to procure the financing required. There are options, and one such option is a revolving line of credit.
What Exactly Is Revolving Credit?
First off, you should understand the difference between a traditional line and a revolving line of credit. With a traditional line, the funds don't replenish. In other words, once you pay off what you've used that amount is deducted from the remaining funds available. With a revolving line, however, the funds do get replenished. So once you pay back the amount borrowed, that amount is now available for use again.
In this sense, a revolving line of credit works very much as a credit card would. The good thing about this is that the money is always there assuming you pay off what was borrowed. So you do not have to keep applying. Once in place, it is there for your continued use. Some other benefits to a revolving line of credit include:
- Flexible terms
- You can build your business credit history
- Use it when you need it
- Sometimes you can get cash on demand
There are primarily three different types of lines: short term, medium-term and bank lines. A short term revolving line generally has a repayment span of 18 months or less. As compared to some longer-term choices, the amounts funded tended to be lower with these. When going with a medium-term line, you usually have one or more years as far as repayment, and the dollar amounts are higher than with the short term. Getting approved though can be more difficult. And finally, with a bank line, again the amount funded can be quite high; keep in mind, these are the most difficult for which to qualify if you're a small business.
If you need additional capital, First Union Lending can certainly help. We offer a variety of business loan programs and lines of credit, and we pride ourselves on helping small businesses thrive. Call today!