Business Line of Credit
A business line of credit, sometimes referred to as a “LOC”, is similar to a credit card in some ways. It allows a business owner to establish a pre-determined amount of funding (borrowing amount) or credit limit to draw funds when needed. It can be used for any business expense. This is different from a conventional loan where the borrower receives all the borrowed amounts in one lump sum. With a business line of credit, the borrower takes whatever amount is needed (up to the pre-established credit limit).
This can give owners a sense of calm, as it guarantees cash on hand whenever necessary, to be used for anything from repairs to the purchase of new equipment to making new hires. If you have time gaps between capital needs and revenue realization, a line of credit can help you ride out the cycle until accounts payable have been received.