Business lines of credit are crucial tools for getting through hard times. As a business owner, you should educate yourself on your available credit options.
Using Credit To Get Through Times of Uncertainty
Even if you are a responsible business owner, you may experience liquidity problems from time to time. Every business needs to keep cash flowing to meet vital expenses as they arise. Fortunately, it is easier than ever for you to secure business credit at this time.
Thanks to regulatory changes in the financial industry, modern lenders offer credit products to suit virtually everyone.
How Business Lines Of Credit Differ From Loans
According to the experts at Lantern Credit, “a line of credit offers cash flow to cover short-term working capital expenses.” People often conflate lines of credit with loans. However, there are some key differences. When people refer to loans, they are typically speaking of installment loans.
In this type of common loan, you receive a lump sum that you repay over time. Oftentimes, the loans are amortized, which means that each payment is exactly the same. Generally, you pay back your loan in monthly installments, although this is not universal.
The line of credit is a more flexible way to borrow money. The line of credit gives you the ability to borrow and spend sums up to a specified limit. After you pay back your debt with interest, you can once again borrow more. Business credit lines can provide you with a good deal of flexibility.
Oftentimes, credit lines allow you to borrow money for a specified number of months or years. Compared to the lump sum loan, the line of credit is better for paying expenses on an ongoing basis. The line of credit is also very handy for paying unexpected expenses that can pop up in the course of your operations.
Business Lines of Credit Are Increasingly Important in the Modern Economy
In a recent survey of small businesses, the Federal Reserve found that 55 percent of respondents reported regularly using loans and business lines of credit (BLOCs). This demonstrates what an important role business credit plays in the modern economy. These lines of credit help companies maintain solvency during unexpected downturns.
Tips For Applying For A Business Line of Credit
The simplest way to determine your eligibility for a BLOC is to start applying and see what happens. However, it may be helpful to learn about the various criteria that will affect your chances of approval. Naturally, your chances are improved if you have better business and credit scores. A higher score generally translates into lower perceived default risk. For the purposes of securing a BLOC, you’ll want to have a score of at least 660. Lenders also consider your revenues when determining your eligibility. You can find business lines of credit to apply for through the help from Lantern Credit. Learning how to apply for a business line of credit with Lantern Credit is a fairly easy process and through their system, you’ll be able to find multiple loans that you can apply for with ease.
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