Any business owner will tell you, cash is king. Whether it’s for sustaining inventory or expanding or purchasing new equipment, all businesses need cash to run their business. It can be difficult to know how to get cash for these various needs. There are a few options for getting the cash you need, which begs the question: do you get a loan or open a line of credit?
Business Lines of Credit
A line of credit provides you with access to funds at any time, up to a certain amount. It can provide you with the cash as you need it, to cover seasonal expenses or unexpected cash flow shortages. On a line of credit, typically you don’t have a fixed monthly payment and each month you pay off the amount you’ve borrowed.
Business loans are great when you have a specific need that cannot be covered with your regular cashflow. Investing in a new piece of equipment or purchasing a new building for your business are great examples of how business loans are utilized. Generally, a business loan comes with fixed terms, a monthly payment and closing costs. These types of loans are usually long-term and paid off over several years.
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The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.