Most small businesses and even well-established businesses depend on external financial support at times, whether because the market is down or they have a seasonal pattern. In any case, they usually choose between the two most popular types of business financing—- business working capital loans and a line of credit. The two have a few similarities, but you need to consider some factors to select one over the other. You also need to know this to determine whether an instant business line of credit is the best one for you or not.
Here is everything you need to know before choosing between working capital and lines of credit for small businesses.
Things to Consider When Choosing Between Business Working Capital Loans and a Line of Credit-
Choosing between two of the most popular options for business finances can be confusing. Let us see what you need to consider when making a choice between business working capital loans and first merchants business line of credit.
#1- What is the immediacy period?
In other words, understand how quickly you need the money for your business. Working capital loans are excellent if you urgently require funds. You can get a significant amount within twenty-four hours if you are approved. On the other hand, if you are looking for revolving credit up to the spending limit, you should go for a line of credit. Remember, the interest rates are high on the credit line if you exceed your limit, and it requires assets to be set up as collateral.
#2- Do you want a flexible repayment option?
When you want to know what your monthly payments for a business loan will be, you should choose working capital loans. The payments made are fixed since the interest rate remains the same from the moment you accept the loan. Repayments with the line of credit can differ since they depend on the amount you spend against your limit. The interest rates will also vary with the amount and can be significant if you fail to make the payment timely.
#3- Are you willing to take risks of being called off?
A line of credit is a good business financial support until the lender calls it off. When such a thing happens, you will have to repay the line of credit immediately, and this can happen to the best business line of credit for startups. On the other hand, working capital is a lump sum amount provided to the borrower at once, hence the chances of it being called off are non-existent.
About Total Merchant Resources-
Are you wondering how to get a large business line of credit? Total Merchant Resources has reinvented small business financing by offering business loans with reasonable credit standards, minimal documentation requirements, and fast approval. Total Merchant Resources financing empowers you, the small business owner, so that you never again have to let small capital needs stand in the way of big business opportunities. Our products include small business loans, line of credit, equipment leasing, fix and flip programs, and web services. Call us at +1 (732) 671-5710, email us, or visit our website for more information about our services.