Lines of Credit
A line of credit is typically offered by a bank or credit union. It gives you access to money as you need it, and you can draw up to a maximum amount for a set period of time. Lines of credit are flexible, allowing you to continuously borrow the funds you pay back. You also don’t pay any interest until you borrow.
Business lines of credit are often unsecured, which means you don’t need to put forth any collateral to secure the credit. These typically come with higher interest rates, however. Lines of credit are best for short-term projects such as office renovations or upgrading your equipment.
Credit Cards
Credit cards are similar to lines of credit, with a few key differences. For example, a credit card doesn’t have a draw period, so you can use it as long as the account is open. If you want actual cash in hand (like you’d receive from your line of credit), you’ll need to perform a cash advance on your card. This often comes at extremely high-interest rates, which can cost you.
Speaking of higher interest rates, credit cards come with higher rates than the other lending options listed here. With some cards, you may be able to pay the balance off each month and avoid interest charges. That makes them an often ideal choice for day-to-day spending within your firm.
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