A Quick Guide On Business Lines Of Credit And How They Can Improve Your Business’s Cash Flow

Things happen: hiccups in cash flow, unforeseen opportunities or new product ideas, and being able to respond to challenges is what keeps small businesses running. Business lines of credit allow businesses access to cash without having to go into debt and they can be very helpful tools to managing cash flow if you use them correctly.?

Here’s a quick guide on business lines of credit and how they can improve your business’s cash flow.

What are LOCs?

Business lines of credit (or L-O-Cs) are similar to credit cards, in that they involving revolving credit and balances; however, unlike credit cards they are not classified as debt. Unlike loans, there isn’t a lump sum disbursement of funds and there also is not an established term for repayment.

Lenders check your business, and possibly personal, credit history and reports and set a limit. The money is available for withdrawal as needed, when needed without incurring withdrawals fees or expenses. The money can then be used for whatever is needed (e.g., operational costs, investing, payroll, etc) and then repaid. The money repaid is then added back to the account for use, minus any fees. (Click Here To Learn More)