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What are business lines of credit? They are a financial option that allow you to draw funds whenever you need cash (for example working capital, seasonal or cyclical cash flow, emergency funds) and only make payments when you have used this line.

Business loans are useful for long-term financing and fixed asset purchases, business loans provide a one-time lump sum with regular fixed monthly payments. Now, the first thing you need to decide is whether to avail of a lump-sum loan that offers fixed payments over a set period of time or a line of credit that you can tap whenever necessary. Your choice will be dependent on your plans for the money and how disciplined you are at handling available cash and repaying debt. In essence, a fixed-rate business loan is a second mortgage where it allows you to borrow money and repay it in fixed monthly installments within a period of 10-30 years. It is usually the best choice if you need a given amount all at once - especially if you're starting a business.

A line of credit, on the other hand, replaces certainty with flexibility. For example, if you arrange for a $50,000 line of credit, you can withdraw funds in increments, like $1,000, $4,000 or $5,000 by simply issuing a check. Payback is also flexible - in some instances, interest-only payments are allowed. You'll pay interest only on what you borrow, so if you do not borrow, you won't owe anything. This being said, it's safe to conclude that this financial option is suitable for people who need to borrow money at irregular amounts. Be ready to tell lenders why you need the money. Merely saying "I just need the money" to your lender doesn't exude confidence nor careful thinking.

Earlier in this session, you studied several of different purposes. Get into the details. Have details regarding your business and your past and forecasted financial performance ready. Lenders will be more impressed with you if you demonstrate to them that you have carefully thought about your business plans. If you need help in the figures area, bring your accountant. You can see flexibility in most places. Remember that lenders would appreciate it if you're thinking about how to pay them back, rather than just on how you can get the money from them. You can even approach a loan broker if you need to avail of business loans or lines of credit. In essence, these types of business loan firms advise you on what you need to get approved. They can help you in filling out your Dun and Bradstreet applications as well as in complying with Homeland Security requisites.

Best of luck to your business. If need be, consult a finance professional to help you in your business loans vs. line of credit decision. Also, conduct your research - it'll prove to be very useful in the long run.

Global Financial Services
Suite 305, 468 North Camden Drive, Beverly Hills, CA 90210
(310) 860-7510