Unsecured Business Line of Credit: What are the advantages?
An unsecured business line of credit help business owners access cash when the need appears. While not exactly like a credit card, a line of credit does have similarities. Here are the advantages to having a line of credit for your business.
Available to Business Owners With No or Poor Credit History
With a traditional business loan, your ability to qualify relies heavily on your credit rating. If you don’t have a credit history or have poor credit, it’s unlikely you’ll be approved for a loan. Unsecured business lines of credit are available for people with a poor credit history or who haven’t been in business long enough to have much of a history.
No Collateral is Necessary
Unsecured business lines of credit do not require any collateral. You do not have to risk your home, car, or a portion of your company’s revenue. If you default on your loan, the company can send your account to collections, but they cannot touch your valuable assets.
Funds Are Readily Available
With a line of credit, money is put into an account for you to draw on when necessary. Use the funds to repair equipment, cover dips in your revenue, or use it to expand your business. Paying off more of the principal frees up that money for you to borrow again when it’s necessary.
Paying It Off Early Doesn’t Lead to Prepayment Penalties
When you pay off your business line of credit early, you do not face prepayment penalties. The funds you’ve paid off are now available for you to access again, should you need them.
A business line of credit is one of the best tools a business owner has against unexpected expenses or unplanned dips in revenue. You never have to touch the money you’ve borrowed, but if you do need cash to cover bills, payroll, or other business expenses, you don’t have to worry about waiting weeks or months for a business loan to go through.