Utilize small business lines of credit to meet ongoing funding requirements

Utilize Small Business Lines of Credit to Meet Ongoing Funding Requirements

When they require business credit, many aspiring entrepreneurs typically think of banks and small business loans. But, banks usually provide a lengthy list of requirements that the borrower needs to comply with. Not all borrowers can fulfil these requirements. Those that can, then find themselves submitting loads of documents in what is effectively a timeconsuming and laborious process. By the end of the process, the few that remain end up receiving only a part of the amount of credit they need. This is precisely why many entrepreneurs consider small business lines of credit to be far more worthwhile than the regular small business loans.

What is a Business Line of Credit?

The 2015 Small Business Credit Survey came about as a result of the collaboration between the Federal Reserve Banks of New York, Atlanta, Cleveland, Philadelphia, St. Louis, Boston, and Richmond. The survey revealed that about 68 percent of small business owners did not apply for financing during the survey period. Of these, only 30 percent did not require business credit. About a third of the correspondents surveyed were reluctant to take on debt. In addition, 25 percent felt that lenders would reject their applications. Their belief was certainly not baseless. Of the 32 percent who did apply for funding, only 29 percent received approval for all the funding they needed.

For the uninitiated, a business line of credit refers to an arrangement between a borrower and a lender. The lender (usually a bank) specifies a maximum credit balance that the borrower can maintain. Whenever the borrower needs access to funds, the business owner can draw down on the line of credit. However, the business owner will not be able to withdraw more than the maximum credit balance permitted by the lender. Once the business owner repays the amount borrowed, that amount becomes available for borrowing again.

Why Do Business Owners Find Business Lines of Credit to be More Advantageous than Small Business Loans?

Small business lines of credit are highly useful to entrepreneurs. Many businesses are cyclical in nature. This forces business owners to borrow money at specific times during the year. Not all businesses have cash on hand throughout the year. As such, having a line of credit whenever you need it is nothing short of a boon for small business owners.

With revolving lines of credit, business owners can utilize the credit as and when they need it. They don’t need to borrow the entire amount available at one go. In addition, they can repay the balance at any time without penalties. But, if they only make partial payments, business owners will need to pay interest on the balance payable.

In contrast, small business loans (or term loans) come with specific payment schedules and end dates. They require the borrower to repay a specific amount each month for the duration of the loan. Some of these

loans even come with pre-payment penalties. For larger, one-time or longterm purchases, look for small business loans. For meeting day-to-day expenses, rely on business lines of credit.

Are You Looking for Small Business Lines of Credit to Meet Your Ongoing Funding Needs?

Small business loans are usually good for meeting specific business expenses or objectives. For instance, if you want to purchase additional equipment or property for your business, these loans are ideal. But, revolving lines of credit give you cash when you need it. You don’t need to visit banks or fill out lengthy loan applications. This is why many small business owners rely on Midwest Corporate Credit for their business funding needs. We specialize in bridging the gap that exists between small business entities and banks. Unlike banks and credit unions, we don’t have cumbersome application processes. All you need to do is to approach us with your requirements. One of our experienced consultants will carry out a free evaluation, which leads onward to the simple application process.

At Midwest Corporate Credit, we focus on connecting America’s institutionalized lenders with small business owners. Our team of experts analyzes volumes of data to ensure that we can provide optimal results to all our clients. Not only do we forecast the approval patterns of lenders in our database. We help ascertain the financing mix that is best for almost any small business too. This is why hundreds of entrepreneurs rely on us to keep their businesses ticking. For more information, call us at 630-3766063.