Tuesday, July 11, 2023

Charles Spinelli Talks About What Makes Business Line of Credit a Unique Option to Boost Cash Flow in Business



Most small business owners require paying for a range of business expenses constantly from rent, bills, purchasing inventory, paying salaries/wages, and a host of other operating costs. These expenses add up frequently, mostly when the payments from the customers get delayed, for late billing, disputes with customers, and so on. This is the basic reason why lacking sufficient cash flow is a common scenario in small businesses which toll on its growth rate. Among the various options available to meet the cash flow, one that has become a popular choice for businessmen is a business line of credit, says, Charles Spinelli. Continue reading to know more about the business line of credit and its advantages.

A business line of credit can be defined as a predetermined funding or credit amount that businesses can borrow whenever they are in need and repay later. Differentiating from traditional term loans, it can be used for business-related purchases such as inventory, machinery, supplies, or managing operating costs. Unlike a term loan which has a fixed monthly repayment, the borrowers can typically pay back their credit line anytime, and without making any early repayment fee.

Noteworthy, what makes it unique from general term loans is that it is ‘revolving’. In other words, the borrower can utilize the funds up to its approved limit and then once it is repaid, the fund become accessible again. On the contrary, a term loan is a lump sum credit that a business can obtain at a time and repay with interest.

How A Business Line Of Credit Can Benefit A Business

As stated by Charles Spinelli, all businesses require easy access to funds to run their business operations, however, many times they struggle due to lack of adequate working capital. This can even be threatening to the sustainability of the business. Having a line of credit facility can come in immense help to deal with these frequent expenses with confidence considering access to the required working capital whenever needed because of its revolving nature. It can be a great way to meet expenses like purchasing inventory, covering payroll, paying salaries, establishing a new office, running marketing campaigns, etc.

The Advantages of Business Line of Credit

The Flexibility Of Usage: Typically, a closed-end loan can be used for specific business purposes, for instance buying advanced equipment. What makes a line of credit unique is that it offers absolute flexibility of usage. This means businesses can use it for purchasing stocks, paying salaries, buying office cars, or other business purposes, etc.

Cash on Demand: Unlike general loans, a business credit line gets access to funds whenever the business needs it. With a credit line, one can borrow money to deal with the short-term needs of a business. This helps the business run smoothly and without any trouble.

Flexible Payment Terms: Opting for traditional loans comes with a de-determined monthly repayment term that often appears challenging for a start-up enterprise. On the contrary, a revolving business line of credit offers flexibility in repayment terms. So, if the cash flow is poor, one can pay just the minimum amount due.

Builds Creditworthiness: Adopting a business line of credit enables a business to build a persuasive payment history to the lenders as all its transactions are displayed in the credit report of the company. Repaying timely and reusing the revolving loan will potentially build the company’s creditworthiness.


Author: verified_user