Most of the business fails to perform because of the shortage of the cash flow in the business. This is due to shortage in cash that doesn’t allow to take bold decision and many other things. Sometimes there is the need of urgency of cash, in business.
This is where, business line of credit comes as a asset.
Business line of credit is specially made for businesses to provide the needed capital, so they can run their business and doesn’t go out of money.
The business line of credit is similar to personal line of credit in work, but it is made only for business owners. The business line of credit is cheaper compared to other source to borrow money. This is the reason why its gaining popularity.
Also, there is a system of unsecured business line of credit, from where you can borrow money from lenders without submitting any collateral.
Every business should have approved business line of credit, because cash flow plays a important role for the growth of business. In addition, having this type of credit support in the back helps to expand the business more easily. Here are the top 5 features of business line of credit in Canada from Small Business Capital
Top 5 Features of small Business Line of Credit in Canada
More Control Over Capital
Borrowing money with business line of credit have more control over the capital, than the traditional loan where lump sum amount of money is given to be paid within fixed time frame with fixed or variable interest rate. However, in business Line of Credit you can borrow any amount of money you want and only pay interest on that borrowed money over unspecified period.
The business line of credit is also called evolved form of loan. This is because, unlike traditional loan you don’t have to apply for multiple loan again and again. As, you paid the previous credit, you are accessible to funds again. This saves the time and influence business owner’s to take credit again and again.
Thus, it improves the cash flow of a business.
The business line of credit offers much flexibility over any other source of borrowing. You can borrow the amount you want any time, also the time period for paying back is not fixed.
Additionally, in traditional loan you need to pay fixed amount every month, whereas there is no such terms and condition in business line of credit.
Thus, this provides flexibility to use the cash, and you to take the right decision for your company, and also maintain peace of mind. You don’t have to worry about the time frame for replaying dept every month.
With the new concept of business line of credit. It has became easier for the business owner’s to borrow money. Making line of credit is a one time process, and you can use it again and again over a period of time till its validity.
Thus, it saves the time of applying for new loans, and submitting document every time. Time is one of the essential factor in the company’s growth. This helps the business owner to get the required cash and concentrate over business.
This it increase productivity too.
Improves Management Power
Often, it is seen in survey that investor invest money in a company, and take the control of the company over the founder.
Here is why borrowing money with business line of credit comes useful. You can borrow money for you company yourself, and you can have full control of your management.
Thus, there is another option for entrepreneur, to arrange fund for their start-ups. And, also if a company failed to arrange funding, they can use business line of credit to arrange funds.
Thus, it’s proves its importance at every end. Hence, it gives opportunity to build your company without investors.
Low Interest Rate
Business line of credit are provided at low interest rate than any other source. There are two types of business line of credit- secured and unsecured.
In secured business line of credit is rate of interest is low as 6%, and for the unsecured line of credit the rate of interest is approx. 15%. Thus, this current rate of interest specially the secured LOC is much less than traditional loan and credit cards rates.
And, you pay the dept on time, you will find it as the cheap way to access fund than any other source.
These, all feature proves business line of credit to be quick source to arrange funds for a short terms. You can concentrate on your products and marketing rather than spending time in applying for loan. You have to use it wisely and take advantages from it, many business mismanages the business line of credit and borrow too much funds than they need, which will decrease the flexibility of the business line of credit.