There is probably no financing option available to small businesses which is considered more valuable than business lines of credit. The flexibility provided by a business line of credit cannot be matched by any other kind of financing, and it literally provides a safety net so that any business can consistently carry out normal operations.
Here are the main kinds of business lines of credit available to small business owners today.
Short-term line of credit
A short-term line of credit has a higher interest rate, and typically carries a smaller maximum credit line, along with a faster turnaround time and less stringent approval requirements. Alternative lenders typically offer short-term lines of credit, as opposed to the traditional banks which offer long-term lines of credit.
Traditional line of credit
A traditional line of credit is generally available to established businesses with proven track records, and is made available by lending institutions such as banks. The maximum credit lines available are generally higher than short-term lines of credit. For the most part, a traditional line of credit will also have a significantly lower rate of interest, as well as lower closing costs than a traditional bank loan, but it will require a higher credit score on the part of the applicant.
Invoice-backed credit line
With an invoice-backed line of credit, the credit maximum is determined by the value of your invoices, and you can still draw capital as needed, rather than simply taking out a fixed amount loan. Also known as Accounts Receivable financing, this type of credit line is based on the premise that you will receive an instant line of credit as opposed to waiting for your customers to pay off their invoices, perhaps as long as 90 days in the future.
Equipment-backed credit line
Some lenders will provide instant cash or a credit line based on the value of some kind of expensive equipment or asset that your company owns. This could be a vehicle, a printing press, or almost anything with significant value, which provides a credit balance to the recipient with the value of the equipment being the collateral. This kind of credit line typically is approved much more readily than other kinds of applications, because the equipment provides built-in collateral.
Business lines of credit with Blackwater Capital Funding
If your company would benefit by having a business line of credit, we may be able to help.
Contact us at Blackwater Capital Funding, so we can explore some possibilities which would get you the line of credit your business needs to maintain cash flow, and to become more profitable.