This post was originally published on On Deck
Whether you’re running a startup or managing an established company, access to capital is essential. One popular financing option is a business line of credit — a flexible funding tool that allows business owners to draw funds as needed, up to a set limit. Unlike a term loan, which delivers a lump sum, a business line of credit offers revolving access to funds. But like any financial product, it comes with both benefits and drawbacks. In this post, we’ll break down the pros and cons of a business line of credit and help you determine if it’s the right choice for your business.
Pros and Cons of a Business Line of Credit
A business line of credit can be a powerful financial safety net or growth engine for small businesses. It’s especially useful for managing cash flow, dealing with seasonal revenue dips, or funding short-term projects. However, it’s not without risks—interest rates, fees, and qualification hurdles can all complicate things. Let’s take a deeper look.
Pros of a Business Line of Credit Flexibility
One of the standout advantages is flexibility. With a business line of credit, you can borrow the amount you need (up to your credit limit), whenever you
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