Let’s get right into it: you need some extra financial help to get your business rolling a little more than it has been doing.
What better way to get that done that a couple of extra dollars, right? Of course, there are plenty of ways to do this, but what works best for you? Here are some reasons for choosing a line of credit over a loan might end up more in your favour.
To get started, let’s establish the key differences between the two: whereas loans have a fixed term that requires full payback by the end, a line of credit never needs to be paid back. Also, the funds will become available again after they are paid, unlike a loan.
Though most are aware of this difference, it is always important to remember as it is the main distinction between the two. Owning a business can often be financially paralysing, and having the stress that comes with paying off a loan by a strict end date can be mitigated if you decide on a line of credit instead.
With &Solved, we strive to ensure that your line of credit you decide to take handled with the utmost care.
Let’s talk about disbursement, another contrast. When taking out a loan from a bank, you will usually receive the funds once you sign a contract. A Line of Credit allows the withdrawal of a certain limit however often, and however much, as long as you are responsible with your monthly payments.
While some may see the loan as the better option in regards to running a business considering you get more money up front, using the Line of Credit is considerably helpful in this difference for a more psychological reason: you’re likely to spend only the absolute required sum of money when you have less at a time, compared to when you have a larger sum immediately.
What about fees? Loans are more likely to charge you monthly, whereas Lines of Credit usually only charge a service fee once a year. Running a business requires a plethora of charges a month already, so one less fee per month will mean less of a hassle. Always be aware, however, of all fees that you are responsible for paying.
You never want to hurt your credit score. &Solved has no application fees, cash advance or early repayment fees. An account keeping fee of $10 only when the account is drawn, otherwise it’s nothing. There is a $35 late payment fee, but this can also be easily avoided.
Convenience is another issue. Taking out loans can often be lengthy, require a lot of contracting and structural work. Taking outlines of credit will often take less of your time with fewer forms to fill. &Solved always tackles this issue head-on by allowing everything to be done online; from filling out your first application to paying any fees.
It is also beneficial if you know exactly how much money you’ll need. Some loans can offer up to $80,000, but few lenders are willing to accept smaller loan sizes and would recommend opening a line of credit anyway.
While you are able to open a rather considerable Line of Credit, you’ll normally have to meet rigorous criteria to be eligible. This is another reason why a line of credit would be more suitable for a business owner; taking out a loan is more suited for someone who requires a large initial lump sum, but every business needs an ongoing source of funding- a line of credit, before a round figure.
Ultimately, deciding one over the other is based on personal preference and the style of the business that is run. What matters most is the discipline one has with keeping everything balanced, and while doing that with a line of credit is usually a little more hassle-free, &Solved is here to retain that perspective.
&Solved makes absolutely sure that you know everything up front, so you’re ready to keep your business running the way it needs to be run.
We are here to answer any questions you have. If you wish to talk to us or apply for a Line of Credit without any surprises, contact &Solved today.