Home Business Charles Spinelli Speaks on the Appealing Advantages of Business Line of Credit That Attract Small Businesses

Charles Spinelli Speaks on the Appealing Advantages of Business Line of Credit That Attract Small Businesses

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Charles Spinelli Speaks on the Appealing Advantages of Business Line of Credit That Attract Small Businesses

Every small business knows that at times, it needs easy access to working capital badly to sustain and grow. Experiencing low cash flow is a common scenario even for the most thriving small businesses due to late invoice payments, meeting unexpected expenses, etc. Under such circumstances, access to the desired fund differentiates between survival and closure of the business in tough times. While there are wide options to get a loan, a business line of credit is the best resort to deal with the situation, according to Charles Spinelli.

Defining Business Line Of Credit

A business line of credit has emerged as an incredibly popular financial tool for small business owners for its easy accessibility and flexibility helping small owners meet emergency expenses and develop. Much like a personal credit card, a line of credit comes with a pre-planned credit limit that a business is allowed to borrow when in need and repay later.

Most importantly, this fund can be used for every business purpose like buying inventory, operating expenses, paying salaries, and so on. Unlike a term loan, a line of credit is a ‘revolving’ form of credit option. This means a business can use it as per the limit and once repaid, the fund will again be available for the business owner. Precisely, it has no expiry date and remains open for the business owner as long as it remains in a healthy position.

Benefits of Business Line Of Credit

Immense Flexibility: A traditional business loan or closed-end loan needs to be repaid within the specified time and in full and typically can be used for any specific business purpose, like buying a machine. In the opinion of Charles Spinelli what makes a business line of credit unique lies in its great flexibility. It allows the owner to decide how much to spend from the limit and that can be paid in flexible terms as convenient. Moreover, the owner can use the credit for multiple business purposes like covering payroll, buying inventory, meeting business promotional expenses, etc.

Access to Fund on Demand: Differentiating from traditional loans, the revolving credit line enables businesses to get access to their desired fund instantly when it is needed. This comes in handy for small businesses to deal with their urgent short-term needs, for example, the execution of an urgent and high-volume order. In the case of a traditional loan, it will take months to get the fund (if sanctioned) due to its long process and loads of paperwork.

Flexible Payment Terms: Opting for a traditional loan requires money repayment of a fixed amount as determined by the lender which seems to be a big challenge for the growth of a small or start-up business. On the contrary, a business credit line offers flexibility in repaying terms. Therefore, when a business experiences a slow cash flow, can easily pay just the minimum due amount while retaining the credit line live.

Help Build Credit Score: Businesses need to establish a good credit rating with the major business credit reporting agencies. Using a business revolving line of credit allows borrowing companies to build a positive payment history that appears on their company’s business credit report. This enables them to potentially obtain future credit for the business based on the company’s creditworthiness.

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