Small Business: Benefits of a Small Business Line of Credit

Having a small business line of credit helps business owners manage their cash flow and be better prepared to handle an emergency. Most small businesses hit financial bumps along the way—slow-paying customers, unexpected expenses, equipment breakdowns, meeting payroll, etc.

Time is your most valuable resource. And, the worst time to shop for funding is when you need it. The time you spend looking for funding is time taken away from addressing those problems and may mean losing business. Regardless of how long you’ve been in business, a business line of credit is the best way to get cash on demand.

A business line of credit works similar to a credit card in that you pay interest on money that’s borrowed, and you’re able to re-borrow on the line of credit up to your credit limit. You can pay back the amount you borrow in full or over time, whichever works best for your business. A line of credit offers better benefits than using you credit card:

    • Lower interest rates
    • Higher credit lines
    • No cash advance fees or higher interest rates for cash advances
    • Quick access to cash

While your business will accrue debt if you do draw on the line, there are definite advantages to having access to immediate cash through a small business line of credit.

  1. Fast access to cash. Emergencies often cost money, and you may not be able to access the amount of cash you need to rectify the situation if you don’t have a credit line. If you’ve had a cyber breach, for example, you need to take action immediately and that may mean hiring consultants or purchasing software services. 
  2. High credit limits. A machinery breakdown could cause a disruption to your business. Fast access to your credit line for repairs or replacement can quickly help you return to business as usual.
  3. Flexibility in payment options. Rather than having to pay back a loan in pre-established installment payments, you can repay the line by paying the amount drawn in full, the minimum payment or something in-between. You have the flexibility to structure how you’ll repay the line depending on your business’s cash flow, which can be a benefit if your cash flow is unpredictable.
  4. Separation. Business lines of credit allow you to establish credit for your business so that you can separate your business and personal credit reporting. This way, you’re able to protect your personal credit and assets.
  5. Opportunities. Allows you to take advantages of purchase discounts from suppliers, offer better repayment terms to your customers and negotiate more favorable equipment purchases with immediate access to cash.

Think of the small business line of credit as financial insurance, it’s there when you need it.

Lakeland Bank loan officers are available to help you find the right business financing solutions, including small business, commercial, equipment, real estate and government loans. To find the representative that meets your needs, click here or call 866-224-1379.

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