What are Lines of Credit?

A business line of credit or BLOC provides a solution for small business owners that is both flexible and easily accessible. Instead of a fixed payment or loan against collateral, this product allows you the option to draw from an approved line of credit to use as needed. You only pay for what you borrow, so interest does not accrue, or no payment is required until you need the capital and draw on the line. These lines of credit vary based on your overall business profile and can be secured against collateral (real estate, accounts receivable, etc.) or unsecured. If you qualify for a secured line of credit, they are usually at a lower rate and more favorable term.

One of, if not the major advantage of a business line of credit is the way you can use it as a revolving source of capital. This allows you to access capital when you need and when you pay down what you owe, you can immediately have access to that money again to borrow when needed. Once again, you are paying interest on the money you borrow, but once you pay it back, it is available again to you and only charged interest when you draw down on the capital accessible. This feature gives a small business owner flexibility at a lower cost when something comes up that they didn’t plan for to use and not throw off their typical operations. You can use it when needed and only pay for what you use.