Posted by Skowhegan Savings on June 24, 2022

What is a business line of credit (LOC)?

A business line of credit gives you access to cash when you need it.  You only pay interest on the money that you borrowed from the line of credit.  Unlike a traditional business term loan in which the full approved loan amount is received after closing, a business line of credit enables you to draw any amount of funds within the approved line amount.  However, money borrowed must be paid down to zero once per year. 

The benefits of opening a business line of credit

Pre-approved access to funds when you need them

A flexible repayment structure allows you to access cash on your line of credit when the need arises. You can repay them, then borrow again when needed.

Control

Maintain cashflow, pay unforeseen expenses, or cover ongoing operating costs. The line of credit is there for you to use anytime, anywhere.

Separate your business and personal expenses

With a business line of credit it’s easier for a small business owner to separate business expenses from personal expenses.

The difference between a credit card and a line of credit

Both a credit card and a line of credit offer the borrower a credit limit that can be borrowed on an as needed basis. The major difference, however, is that the limit offered by a credit card is usually lower than a line of credit (LOC) but the interest rates on a credit card are typically higher.   

Find out if a small business line of credit (LOC) is right for you

At Skowhegan Savings our business line of credit is a versatile tool, giving you pre-approved access to funds when you need them for operating expenses, inventory purchases, or accounts receivable. Contact one of our local commercial lenders to learn more.

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