Line of Credit Loans

Line of credit loans are a borrowing option that may be a good fit for many small business owners and executives. In order to protect against a variety of uncertainties, entrepreneurs need the assurance of being able to borrow money for future growth or immediate business needs. The loan experts at First Bank connect businesses to the money they need to thrive.

Borrowing for Business: Another Option

There are a few key differences between line of credit loans and traditional bank loans. Here are a few ways they differ and why borrowing with a line of credit may be the right option for you:

  • Line of Credit Loans Are Secured — This means that they require some type of collateral from the borrower.
  • Credit on Your Terms — A line of credit loan supplies a certain amount of money (credit) that can be borrowed at any time for any reason.
  • Spending Freedom — This means line of credit loans require some type of collateral from the borrower.

Most line of credit loans are used for small expenses and to account for short-term financial uncertainty. Having a line of credit provides access to the cash you need without requiring a minimum monthly payment that could put a strain on your immediate finances.

Line of Credit Means Flexibility

Interest on a line of credit loan doesn’t begin to accumulate until funds are taken from the account. Other reasons that line of credit loans provide a more flexible option for business owners include:

  • Once the borrowed amount is repaid, the credit line is reinstated. This is why line of credit loans are called revolving credit.
  • They have flexible repayment terms.
  • Unlike a standard credit card, there are usually no minimum monthly payments.
  • The interest rates are typically lower than credit cards.
  • If used well, they can work to improve the borrower’s credit score.

Entrepreneurs interested in a line of credit loan must demonstrate good credit history before a bank approves the loan. Additionally, while line of credit loans have lower interest rates compared to those of other unsecured loan options, such as personal loans and credit cards, their interest rates are typically higher than secured loan options.

Line of Credit Loans from First Bank

Give your business increased flexibility with a line of credit loan from First Bank. Repay and reuse your credit line and take advantage of business opportunities as they arise. Find a First Bank location near you today.

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Sources:

Investopedia: www.investopedia.com/articles/personal-finance/basics-lines-credit.asp

SBA: www.sba.gov/blogs/5-reasons-business-revolving-line-credit-may-benefit-you

 


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