Startups and small organizations are in trend now. Entrepreneurs have many different ways to get funds. They can borrow it from any close family member or investors from the industry that are supporting their ventures. In all of these ways, there is one way that is a business loan. Well, it has different types and also its own benefits. We are here discussion Business line of credit and its pros and cons. This type of loan is mostly acquired by a young business enthusiast who takes funds from banks to jump-start their venture.
Lines of credit are usually a good way for you and your small business to have cash on hand when things aren’t going well. It’s a flexible financing product that lets you withdraw funds up to a predetermined amount—this means you can withdraw funds as you need it, as opposed to receiving the full sum of the loan all at once.
Where you can find it?
Many banks in Singapore are offering a business line of credit but online lenders might have an easy application process with flexible policies for any start-up. However, there are pros and cons of everything and if bank policy doesn’t scare you away, let’s talk about its benefits.
Pros of Business Line of Credit in Singapore
1. You, Will, Have Capital for Your Business
The foremost requirement is to acquire a sound amount of cash for your venture. By applying for a loan, you will have fast cash whenever you need it.
2. You Can Preserve Ownership
Asking from investors can lead to the requirement of equity. On the other hand, loans are simple and you can always retain ownership by paying off the loan in installments. Later, you can always look for potential partnerships. Investors can also have a right of taking a decision but loan lenders are only concerned with payment.
3. Personal Cash Flow
It will also help you manage cash flow with easy way. Money flow is one of the most essential things when starting a business. Every business ideas have their own risks of failure and loans will allow you to pursue your dream business without disturbing personal money flow.
Business Lines of credit don’t always demand you to provide a motive for the loan, which lets you use your credit on what your business needs time-to-time.
Cons of Business line of Credit
If your business requires large capital investment then you might opt for any other loans. The line of credit has limitations and usually have smaller borrowing limits than other loans.
2. New and too small business can face troubles
If your venture is just new and hasn’t set quite a value in the market, you might have to face some hurdles before acquiring a credit. Also, there are chances that you lack the ability to utilizing credit in the right way.
3. Higher credit risk
Your business flourishes or fails, you are liable to pay the credit. There no such conditions that you will free from the loan payment.
There are many other advantages and disadvantages of Business line of credits but you have to go with clarity regarding your business requirement. Right decision at the right time shows your credibility in business too.