07 Mar What business loan options are available?
How a business line of credit works
So if you have a $20,000 line of credit, you could draw down $10,000 one week and repay the money the following week, only accruing interest on the money you’ve accessed until it is repaid. It’s a bit like a credit card but may come with lower interest rates, and can be a useful safety net if your cash flow is unpredictable.
A line of credit is usually – but not always – a form of unsecured debt, so borrowers are usually not required to put up collateral.
What a business line of credit is useful for
It can also work as short-term top-up to working capital so you can take advantage of a particular opportunity, like a good deal on a bulk buy of inventory, or for covering the costs of paying extra staff over a busy period, funding rent on a pop-up space, trying out a lease on a co-working space, or funding repairs to equipment.
Contact us today to organise a business line of credit.
How a business loan works
A business loan is a lump sum amount that you receive on the day the loan term begins. It comes with a schedule of regular repayments, and there may be restrictions on whether the full amount can be paid back early. Typically, you will need to pay interest on the outstanding debt throughout the term of the loan.
Business loans will usually be higher amounts than lines of credit, and some do not require collateral. Larger business loans may require collateral.
What business loans are useful for
Because business loans are usually available for larger amounts than a business line of credit, they can be useful to fund large purchases such as equipment. They can also be a good solution to spread out a sizeable one-off expense – like an office renovation or shop fit-out – that needs to be paid upfront.
A business loan may be used for start-up costs, capital investment, business acquisition, marketing campaigns, purchasing new or second hand equipment, starting a franchise, purchasing commercial vehicles, technology upgrades and refinancing other debt. While a business line of credit can also be used to fund inventory costs or to take advantage of a one-time deal on discounted stock, for instance, a line of credit could also be suitable for those needs.
If your business needs funds for opportunity, growth or cash flow support, a business loan or a business line of credit could be the answer! Speak with us today about the right solution for your business.