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Business loan and line of credit

Business loan and line of credit

Most small and medium-size operations rely on their cash flow to cover various expenses including material, payroll and marketing. Our business loan and line of credit program provides you with crucial funds, needed to capitalize on the next opportunity when it comes up. Use the funds to modernize your operations, increase your marketing and consolidate your business debt.

There is a choice between a business loan and a line of credit when a business needs cash injections.

Our company provides both of these options. And also here we will briefly outline the difference between them and the terms of the most beneficial use.

A business loan is also known as a term loan because it must be repaid by the end of a set time period—or term. A business loan resembles a mortgage, in that the borrower receives a lump sum and then repays principal and interest periodically, usually monthly—although some commercial lenders offer more frequent repayments. Borrower amortizes business loans. This means—when paired with a fixed interest rate—each payment will be for the same amount for the life of the loan, however business loans with interest-only payments or balloon payments do exist.

Typically, business loans charge a fixed interest rate over the entire term, although variable rate loans are available. Term loans are generally collateralized by a borrower’s business assets, such as real estate, equipment or inventory.

A business line of credit is similar to a cash advance on a credit card, in that it is a revolving loan. That means you can access money up to your credit limit whenever.  And as often as you wish, repay the amount under flexible terms. Also, borrow money that you’ve paid back as many times as you’d like. Interest rates are usually variable, meaning they change over time. Generally, you don’t need to collateralize lines of credit. Although collateralized credit lines offer lower interest rates. There is no set term to repay the borrowed amount, as long as you make the minimum payments each month. You only pay interest on the amount you actually draw from the credit line. If you never use your line of credit, you’ll never pay interest on it.

Each of the lending options has its own advantages and disadvantages.

Also, the most important thing is that each of them has its own specific application.

It is most appropriate to use a business loan for large, long-term financing. For instance, the purchase of fixed assets, creation, expansion or relocation of facilities, or investment in a venture.

If the need for cash is short-term, then it is more appropriate to use a credit line. Such needs can arise in the case of seasonal sales, purchases of short-term assets, sudden expenses and others.

Regardless of your needs, Finance IT Forward will help you find any kind of business loan.