Mitigate risk and potential cash flow issues with a business line of credit:
Updated: May 25
Small business owners know that sometimes businesses need cash. Sometimes they need it fast. Liquidity is a lifeline for small businesses, and owners need to make sure they have the tools in place for every eventuality. A business line of credit is a strong defence against volatility, emergencies, or simple fluctuations, extending a continuous option of cash liquidity so that cash flow never becomes a problem. Read this article by iCapital for more information about business lines of credit, how they work, and whether your small business would benefit from a line of credit.
What is a business line of credit and why would you use one?
Just like a personal line of credit, a business line of credit is a loan that gets you access to capital that you can use to meet your needs. For small businesses, these needs might be purchasing inventory, replacing or repairing equipment, renovations, paying off unexpected expenses, or other short-term cash flow gaps. Cash flow allows you to be nimble and make decisions quickly. With a business line of credit, you can simply take out an advance on a pre-approved amount with its own predetermined repayment plan to meet your short-term needs.
A business line of credit from iCapital is an unsecured line of credit with pre-negotiated interest rates and repayment terms. With this product, you can access any amount of money up to your limit on an as-needed basis. And, when you take out a business line of credit with iCapital, our software will automatically send a notification when you become eligible for credit limit increases so you’ll always have up-to-date information on your available cash flow. If you’re interested in a business line of credit, simply apply online with your bank statements and your application will be reviewed on the same day. You can expect funding in 24 hours or less.
Alternatives to a business line of credit
A business line of credit is not the only product you can use to ensure you have access to cash flow for your business. Other products include:
Term loan With a term loan, you repay daily or weekly over a set term. There is no interest rate but rather a predetermined fee negotiated by you and the lender, based on your credit score, length of time in business, and other factors. This type of product might work well for a single unforeseen expense such as replacing broken equipment.
Merchant cash advance Also, a one-time loan product, a merchant cash advance is perfect for those in retail, hospitality, or food service-type businesses. Rather than having a set repayment amount, you repay based on a percentage of the daily sales transacted through your credit/debit machine. This means that you can get much-needed cash flow without worrying about closures or slow seasons.
Secured business loan With collateral (typically property), you can get a business loan to use toward your expenses. As a secured product, you may be able to negotiate lower interest rates and longer repayment terms.
Cash flow is absolutely vital for small businesses and it can be hard to keep on hand. Business loans, cash advances, term loans, and lines of credit are all powerful products to help you keep your business running smoothly. Applying for a business line of credit will ensure you can enjoy the peace of mind knowing that you have access to a pre-approved amount, should the need arise.
The information above on business line of credit and business loan options has been provided by iCapital.