Unsecured business credit line is also called a revolving credit line or LOC. It allows the small businesses to take some money for their venture different from the old loans that used to work. It is different from just asking money, getting application approved and then having a lump sum of money in hand instead you are given the option to get a certain credit amount approved and then start withdrawing as per your need. This is a very simple process, however certain facts can be useful for you to make a decision and for an efficient process.
A few of these facts inculcate the following –
- You can pay the money only on the amount that you have borrowed rather than on the entire approved capital
- You usually do not have any sorts of prepayment penalties
- You can be charged some annual or maybe monthly fees in case of not borrowing.
- You can also make a request to the bank to deposit cash from the LOC into the bank itself which will help you use credit with people who don’t accept credit cards.
- No cash advance fees is required
- The time for the funds to get deposited into the bank may take a day or so.
Many business owners do not prefer to put an asset on line to secure their finances and this condition and preference is met through an unsecured business credit line. It is in fact very much possible that some startups and other small businesses might not have any assets to put for security and considering this situation, the unsecured business credit line was brought into the picture which is quick, easy and accessible to all.
An unsecured business credit line is very simple to use just like any credit card and it allows you to borrow just like credit cards but have a limit assigned to it and as and how you keep your account balance and repayments decide whether you would be allowed to borrow further or you would be rejected borrowing.
There is no need for you to search for a security and be disheartened on its collateral if you wish to go for an unsecured LOC but for a secured one you will need. They are beneficial for a borrower and takes into consideration the needs of the business. Even though the unsecured business credit line might be a bit expensive with some higher interest rates, overall they are very beneficial.
It undoubtedly remains a good choice any day. You just have to keep a check of both the boons and banes of the line of credit and see if they fit what you are expecting and then you are good to go. Thus, it is important that you know all the above facts and then wisely make your decision considering all aspects of choosing this method. This will lead to greater satisfaction and contentment and could prove to be beneficial if investment is done the right way.