A business line of credit works very much like a loan, but with some key differences.
You can use this over and over.
You are not given the money automatically it is simply available to you.
Also there are several ways to obtain a line of credit.
We will discuss the details of these points in today's article.
They can be reused.
Unlike with a business loan, this can be used over and over again, as long as there is still available credit.
So, if your credit line is for $5,000 and you use $2,000 you have $3,000 available.
If you were to pay back the $2,000 you'd have $5,000 left available.
They are not disbursed, and typically have interest grace periods when used.
Unlike a loan where the full amount is given to you, with this option, funds are available to be used when you want to.
Much like a credit card, if you use this option and pay it back during a grace period, typically 30 days, you do not have to pay interest on your purchases.
These are provided by banks and other non traditional lender.
You do not have to go to your bank for your line of credit, it is also possible to get one from a non-traditional lender, such as an investment group that specializes in funding small businesses.
By taking the time to understand these basics, you can make a proper decision as to whether or not you should apply.