A credit line for companies is a way in which financial institutions grant a certain amount of money so that it can be available at the time it is needed.
Some lines can be simple, while others are revolving. This means that in the first case you are granted an exact amount to a term that normally ranges from 6 to 24 or 36 months, to finish liquidating it. And as for the revolving lines, they work in a way that sets a maximum amount but is paid as you have the money.
The credit line is directly linked to your bank account and can even be a specific card for it, but it depends on both the conditions of the financial product and your needs.
What advantages does a business credit line have?
You have access to money immediately
Since the money is in your business account, you can make immediate use for all kinds of needs that arise. For example, for the purchase of material, renew equipment or machinery, among others. This will allow you to access better business opportunities and thus grow your company.
You can cover a lack of liquidity
One of the biggest challenges that SMEs face is the lack of liquidity. Therefore, a line of credit can help to cope with various financial obligations such as payroll, suppliers, purchase of inventory, etc.
You create credit history for your company
When you get any type of financing or loan you begin to create a history before the credit bureau, which is a point in favor of your business. That is, one of the advantages of starting to request a line under the name of your company is that the type of credit conditions can be better.
Where do you get a credit line for SMEs?
Business loans are available in both traditional banking and other institutions. You can compare the offers based on the amounts, interest rates, commissions and terms they offer. However, there are other factors that are challenging the traditional way of getting financing and that can largely guide your decision.
Due to the agility with which the businesses are developed and the needs that they present, certain financiers have improved their processes to be able to respond just in the moment. Thus business owners can continue with their projects or accept new ones with greater security.
Some institutions request that you have a minimum of 4 years in operation, present a guarantee or guarantee and a large number of documents to assess credit risk. But others, such as those that operate online, have better risk analysis models and since they are more specialized in business, they set requirements that an SME can really meet.
As well as looking for low interest rates and commissions, it is important that you evaluate other benefits that you can obtain. These can range from increasing the credit line in a certain time to having subsequent credits with better conditions.