Every entrepreneur knows that having the money to start or expand a business can be difficult. Even with good financial control, saving is a challenge given routine expenses. But don’t give up! You can opt for a small business line of credit.
It is known that getting loans from banks and finance companies involves bureaucracy, a lot of research, and a pinch of math to calculate interest, so in this article, you will learn all about credit lines and get to know the main financial institutions that can help you expand your business and profits.
What are lines of credit for small businesses?
Lines of credit are loans that an individual or company applies for from a credit company (also known as a lender), which may or may not approve and fulfill the request.
There are two loan formats. In the traditional one, you pay back the entire loan in installments with interest. Or, you can use the credit lines and pay only what you use of the amount released.
You need $2000 to remodel your company and you apply for a small business line of credit for this amount. However, the work came out cheaper and you only spent $1700.
In this case, you only pay the $1700 plus the interest proportional to the amount used, while you return the remaining $300. And lines of credit are services that usually offer loans in this format.
Besides the more flexible payment model, it is common for small companies to have access to lower and more attractive interest rates.
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Why look for a line of credit for your company?
During the pandemic, just as several businesses went bankrupt, several new companies sprang up. In a research released on CNN Brazil, the amount of micro and small companies opened in 2021 showed a 30% growth compared to 2020. It is the highest since 2018.
In all, 3,782,437 new businesses emerged in 2021, with an emphasis on the technology sector. Other older companies had to adapt and go through the so-called digital transformation. Thus, they started to offer delivery or online sales.
And how does this relate to credit lines? If more people are entrepreneurs, more people need money. In the first half of 2021, the credit search registered an increase of 435% compared to 2020, according to Exam Magazine.
Many people may be afraid of acquiring credit lines because of the risk. And they are completely right. Don’t take out a loan if you don’t know what you are doing. But this is not a moral discussion: it is strategic.
Make a good plan for the use of this resource. Plan when and how will it be applied? And how will you make it pay off? If you have a restaurant and you lose customers because you don’t have enough seats, the line of credit allows you to buy more chairs. Small business lines of credit are great if you have thought about what to do with them, do not be afraid to take one!
An online loan has some clear advantages and you can get cash loans nearby by online means in which you can connect with multiple lenders and can compare their offers and choose the appropriate one.