Revolving lines of credit for your business allow you to borrow up to your credit line as many times as needed to help meet your company’s expenses and growth goals. You can either draw cash against the account, issue payments to suppliers and creditors, or both. Many business owners appreciate the flexibility of revolving lines of credit compared to a term loan or even a credit card. Below are seven benefits you can expect to enjoy if you decide to pursue this alternative form of business financing.
- Establish a business credit file: As you make payments on time each month, your payment history uploads to the top business credit reporting agencies like Dun & Bradstreet, Equifax, and Experian.
- Flexible monthly payments: Without a fixed monthly payment, you can pay on your revolving lines of credit based on your own budget and minimum payment requirements. You also don’t need to reapply for financing because you can access your credit line over and over.
- Higher credit limit: Many banks, credit unions, and finance companies tend to assign higher credit limits to revolving lines of credit than other types of credit. However, you’re under no obligation to use all the credit available to you.
- Obtain credit in the future without a personal guarantee: Lenders look for applicants with strong credit files, stable earnings, and two or more years in business before considering approving a loan without the requirement of a personal guarantee. Business revolving credit accounts help you establish a solid history.
- Qualify for merchant terminals: If you ever apply for a merchant terminal or processing, you can be sure the lender will check your company’s credit profile. Again, revolving lines of credit help you create a strong profile in a short time.
- Separate business and personal credit reporting: This account has no impact on your personal credit file and vice versa.
- Tax efficiency: Because every purchase you make using a revolving credit line is for business, it makes for much easier recordkeeping come tax time.
Feel free to reach out to Ambition Funding Solutions with additional questions about a revolving line of credit for your business.