Running your own business can be less of a hassle when you have some unsecured lines of credit. This type is easier to obtain than business credit and you have more freedom when it comes to using it.
An Overview of Business Credit
Like any other, a business credit line lets you spend a certain amount of money. Unlike other types of funding, this one limits you to only having to pay interest on the amount of money you borrow. For as long as you aren’t using any of the credit, you aren’t paying any interest on it. However, one downside to it is that you may find yourself paying a monthly or yearly fee, whether you’ve used the credit or not.
Yet you can also use unsecured lines of credit to get quick cash. This cash is put in your business bank account quickly, which is helpful if you have to purchase something you cant’ pay for with a credit card. Unlike with most credit cards, you won’t pay a fee if you take a cash advance from your unsecured line of credit.
Who Uses Unsecured Lines Of Business Credit
Unsecured credit is usually your best option if you are in the early stages of launching a small business. When you consistently keep up with the payments, you can use an unsecured line of credit as much as you need to. However, unsecured credit will almost always cost you more than secured credit would.
If you take unsecured lines of credit for your business you’ll need to be prepared to pay higher interest rates and fees than you would otherwise. You will often find that your credit limit on an unsecured line is significantly less than it would be if it was secured credit. Unsecured lines of credit have to be paid back quicker too, so you run the risk of having to make much higher payments every month.
In some cases, you may even have to sign a personal guarantee. This lets the lender know that if you can’t pay the credit back with your business’s money, you’ll have to do it with your own personal money.
For more information about unsecured lines of credit, please contact Capital Funding Source.
