Small business owners are often concerning with finding the right means of financing for their companies. Revolving lines of credit are funding products that function similarly to credit cards. You receive a loan that allows you to borrow funds up to a predetermined limit. You are only charged interest on the funds that you use, and when you pay back the loan, you have access to the same amount again whenever you need it. Here are some of the benefits of having a revolving line of credit available to your company.

Have Cash When You Need It

The best time to apply for a revolving line of credit is when your business is prospering and your application is more likely to be approved. In this way, you have the funds ready and available to draw on in times of need. For instance, your business may experience an unexpected emergency, you may need to purchase inventory to fill a large order, urgently-needed equipment may break down, or slow-paying clients may affect company cash flow. Lines of credit can help businesses handle all these situations.

Remain Flexible

When you obtain a traditional term loan, you receive a single lump sum that you have to pay back in full with interest whether you end up requiring the entire amount or not. In contrast, revolving lines of credit remain dormant until you need them, and you only pay interest on the amounts that you draw. Additionally, unlike term loans, once you pay back the funds you borrow from lines of credit, the funds remain ready to draw on again when necessary.

Pay Lower Interest Rates

Unlike credit cards, your funding from lines of credit can often be secured by company assets such as real estate, equipment, and inventory. This means that the interest rates can be lower because lenders carry less risk. This translates into savings for you as you meet your business’s financial needs.

For more advice on business lines of credit, get in touch with Star Capital USA.