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5 Reasons a Business Line of Credit Could Be Just What You Need

Whether you’re an entrepreneur starting a new venture or you’ve been in business for quite some time, here’s a question that is on practically every business owner’s mind:

How can I smartly manage the costs of my day-to-day operations?

Costs like inventory, supplies, payroll, and unexpected expenses don’t stop. Emergencies or seasonal fluctuations might not always be predictable and you might need money to meet your short-term needs.

The answer could be a business line of credit. What you can count on with a business line of credit can make financial resources available to help balance the ebb and flow of business cycles.

One of the many advantages of a business line of credit over a regular business loan is that interest is not usually charged on the part of the line of credit that is unused, and your business can draw on the line of credit at any time. It can also be used as an overdraft line of credit, and it can help you refinance high-interest debt.

SBA.gov has listed additional benefits that come with opening a business line of credit:

  1. Flexibility of Usage — A closed-end loan (one that must be repaid in full by the end of the specified term) is typically used to fund one specific purpose, like a piece of equipment. A business line of credit offers more flexibility and can be used for a variety of purposes, like purchasing inventory or covering payroll. This allows you to decide what to spend your cash on for your company.
“You decide what to spend your cash on for your company.”
  1. Access to Cash on Demand — Unlike a traditional loan, a revolving credit line enables you to source funding before your business actually needs it. Because of the cyclical nature of business, you may find yourself wanting to borrow money to take care of your company’s short-terms needs. By being able to access funds on the credit line at any time you can keep your business running smoothly, day in and day out.
“Keep your business running smoothly, day in and day out.”
  1. Flexible Payment Terms — Traditional term loans require set monthly payments that can potentially present a challenge to the growth of a start-up business. On the other hand, a revolving credit line offers flexible repayment terms. Unlike a term loan, if a business has a slow month it can pay the minimum amount due.
“A revolving credit line offers flexible repayment terms.”
  1. Personal and Business Separation — One of the challenges many business owners face is keeping personal and business expenses completely separate. The benefit of a revolving business credit line is that it enables you to streamline and track your business expenses since your credit line is dedicated solely for business.
“Your credit line is dedicated solely for business.”
  1. Builds Business Credit — Businesses need to establish ratings with the major business credit reporting agencies. Using a business revolving line of credit allows you to build a positive payment history that appears on your company’s business credit report. This will allow you to potentially obtain future credit for your business based on your company’s creditworthiness.
“A business revolving line of credit allows you to build a positive payment history.”

The success of any business depends on an uninterrupted cash flow for day-to-day operations. Opening an ESL Business Line of Credit could be just what you need to stay up and running. 

ESL Business Line
of Credit

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