For many people, in terms of gaining a certain sum of money, loans are the only way to go. While many companies (such as LendNesse) supply a set amount of money, a loan doesn’t always fit every situation. You may do better to venture into a business line of credit.
What is a Line of Credit?
To understand what a line of credit is, it is easier to use an example. Let’s say that you do not have health insurance, but have recently injured your leg and are anticipating a lot of medical bills in your future. You can’t apply for a loan because you don’t know how much money you actually need. What do you do?
A line of credit allows you to take money, as you need it, and come back for more (so long as you repay your debt). As your medical bills pop up, you take the money you need and eventually will pay the same amount back. Using this method of payment, you can go into situations without worrying about knowing the set amount of money to pay.
The Business Line of Credit
A business line of credit is essentially the same thing as a normal line of credit. Depending on their credit score, a business can take as much money as they need when they need it. Nerdwallet shares that, usually, businesses need to have a good revenue and a couple of years of running to gain a larger amount of credit. They must also have a good credit score in order to apply for most amounts of money (businesses, like LendNesse, offer a business line of credit to businesses with credit scores of 600 or higher).
The Difference Between a Line of Credit and a Loan
When one applies for a loan, they receive a set amount of money that they must begin to pay off immediately. A line of credit is much more flexible. With this option, one can take as much money as they need when they need it. While, yes, they still need to pay off their debt, they actually only need to pay what they have used.
However, if you do know your set amount of money for whatever funding you need, a loan can end up being less costly. In terms of how much money you receive, a loan will give you a large amount all at once, whereas a line of credit is more like a credit card (you take what you need as you need it). If you are in need of a large amount of money all at one time, a loan would be better for you.
Conclusion
Which is for you? Well, you have to ask yourself a simple question before proceeding. Do you need a set amount of money now or do you need a stretch of money for the next few months? If you need a set amount, a loan is better suited for you. Meanwhile, a line of credit is better suited for a stretched, uncertain amount of money. For some of us, a loan is a simple fix to a big purchase, but for those of us needing to make uncertain payments for an uncertain amount of time, a line of credit is the perfect solution.
LendNesse, a versatile financing business, offers both of these options in as little time as days. With LendNesse, discover funding experts who share an interest in helping your business succeed. Lines of credit are very helpful to help startup any small business looking to grow. LendNesse does not only offer these, but they offer their personalized help and advice towards funding your business.
