Business Line Of Credit Basics

by Crestmark 7. March 2012 04:47

A business line of credit is one of the most flexible financing options that a company can obtain. A line of credit is defined as a form of financing that your company can tap into at its discretion. The typical line of credit has a fixed cap, but up to that cap the business is free to withdraw as much as is needed. One common example of a business line of credit is a credit card. The card itself has a limit, but up to that limit the user can charge as much as needed. While a good way to illustrate what a line of credit is, credit cards are merely one of many lines of credit. They may be advantageous for your business, but they're far from the only option. One of the best features of a business line of credit is that since you control the amount you borrow based on your needs, you are able to make borrowing decisions that minimize interest expense.

A Line Of Credit Is Good For Working Capital

Working capital is inherently fluid. The amount required can change from month to month, which means a flexible financing source is often an advantage. In a typical setup, Crestmark clients have daily and weekly access to their funding, which allows it to be utilized on an as-needed basis. The exact amount available will depend on a number of variables, including company revenue, assets, invoices sent to customers, company performance, and credit. The requirements and available funds are determined by the type of financing you obtain.

Asset-Based Lending

Crestmark offers a business line of credit through asset-based lending. Asset-based lending is unique because it can be offered in such a wide variety of situations. There are many different elements of a business that can be considered assets for this purpose, including accounts receivable, inventory, and machinery/equipment. Through asset-based lending, Crestmark can often offer a business line of credit to a business in situations where funding may have otherwise been difficult to obtain.

If your business needs flexible working capital to increase cash flow, a business line of credit might be a good option. Crestmark may be able to assist you with your credit needs. Contact us to learn more. 

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