5 advantages of Business Line of Credit Loan

There are thousands of financing options in the market today for borrowers looking to start their own venture or expanding their existing business. Cash in hand is an important fact that people in business always need. It is a type of short term funds extended to an individual, a business or a government by various financial institutions and lenders Business Line of Credit loan can also come in form of demand loans, overdraft protection, export packing credit, purchase of commercial bills etc. It is a source of funds that can be used by the borrower as and when it is required. Interest is charged on only the amount withdrawn from the total credit extended by the lender. Once a line of credit is requested to the bank or any other financial institution, a credit limit is established against the credit worthiness of the customer and the relationship he has had with the financial institution. Business Line of credit is popular among entrepreneurs because of the flexibility in the access of cash that it offers. Below are the % advantages that this popular loan offers to the entrepreneurs.

Revolving line of credit- Business Line of Credit does not have any fixed number of payments. The borrower can repay and draw down loans within the credit limit extended to it. One of the greatest examples using this method is our very own credit card!

Flexible- Lines of credit provides flexibility to the borrower. The borrower can withdraw as many times he wants to and at many amount he wishes to, subject to the credit limit extended by his financial institution.

Value for money- Interest rate is charged on the amount of money withdrawn from your credit limit and not on the credit limit extended. You are paying interest only on the money that you draw. You sure do save interest cost by not paying for the unused funds. However a line fee might have to be paid on the credit limit approved. Pay as you use is what defines business line of credit loans from others.

Easy and convenience- It’s easy and convenient. Business Line of Credit can be accessed through cheques, electronic transfer or financial institutions. Your transaction and lending accounts are consolidated, giving you a one window access to all your needs.

Rates- The lines of credit come with different competitive rates depending on your business, your credit worthiness, your relationship with the financial institution and most importantly your financial lenders. The business size and the nature of business, the current market scenario is also a deciding factor of interest rates.

Repay and reuse-You can repay and reuse the loan as and when you need it. Business Line of Credit loans can be repaid at your own time and up to the limit defined. That gives you enough power in terms of availability of money especially during times of financial crunch.

Business line of Credit is just another type of financing option available in the market. Do weigh its pros and cons before you avail the loan. Look at cash feasibility you require for your business, find out the rates of a traditional small business loan and compare them with the rates of the lines of credit extended by your financial institution. If traditional small business loan seems a viable option, by all means go for it. At the end of the day you are the owner of your business and no one can know our business better than anyone else.

For more information visit - http://www.biz2credit.com/get-a-loan/business-line-of-credit.html