Lines of credit can be incredibly useful for new and established businesses. A credit line comes with countless benefits, and if handled responsibly, can significantly improve your business’ fiscal standing. Whatever line of work you’re in, and whether you’re a small or large business, there are a number of reasons to consider a line of credit for your business. 

Borrow As Needed

Business lines of credit typically offer considerable flexibility in terms of when you can draw funds, and how much you can take at a time. Therefore, you have the relative ease of having access to cash as needed — and provided you make regular payments, the credit line should stay open. Say you need a relatively small amount of cash to cover a portion of your payroll, replace a piece of broken equipment, or fund a minor structural upgrade: a credit line may allow you to draw the requisite amount, potentially without even putting up collateral. Besides, with a business line of credit, and unlike under a fixed-sum loan, interest will only be paid on funds borrowed.

A related perk is repayment flexibility: credit lines typically have more varied possibilities for repayment than would a traditional loan, potentially allowing you to repay when your business is thriving, and borrow when things are more challenging.

Raise Your Credit Score

A particular benefit of a business line of credit is that it can make you more attractive for a larger loan in the future by improving your credit score in the present. Regular repayment will help build your fiscal profile in an easy and strategic way that can benefit you and your business over both the short and long-term, setting you up for even more expansive growth further on.

Take Advantage of Low Rates

Unlike, for instance, a hard-money loan, or a credit card, business lines of credit will generally adhere  to the prime lending rate, offering you ease of access to cash without exorbitant interest rates. Provided you make regular payments, you will have easy access to cash and your rates will stay low, an obvious boon for any business, whether you’re starting out or are up-and-running.

Financing is complex and often tricky, particularly for younger businesses. Distinct aspects of your business — for instance, a major renovation, versus a minor equipment upgrade — will call for different means of funding. But for flexible, largely short-term needs, a business line of credit may offer convenient access to cash and serve as a vital tool in your financial arsenal.