What Is the Advantage of a Secured Line of Credit?

For business owners looking for some financial flexibility, one of the more inviting options is a secured line of business credit. Such a line of credit provides a business owner with the funds to buy

equipment, fund special projects, maintain steady business operations, or deal with any financial needs that may arise. Unlike a loan, a line of credit can be used without reapplying each time funds are needed, since a line of credit is a continuous source of finance that is used much like a credit card (yet typically without a monthly bill).

A line of credit can be especially helpful in covering fluctuations in cash flow, as the business owner can use the available funding to maintain working capital until the inventory sells and receivables are collected. By continuing to finance the business at a steady pace, the business owner can keep growing the business. Essentially, by paying back just the interest, a company can keep the line of credit (essentially an advance) in use and leverage the cash on hand.