Essentially all businesses need additional funding sometime or another. One type is a line of credit. Can it be useful to your business?

What is a Line of Credit?

A line of credit is a specific form of financing, in which you have a limited amount of funds on reserve to use if and when you need to. It is provided by a bank, credit union, or finance company. You repay the credit immediately or over a prespecified period of time with interest. 

How is Collateral Defined?

Collateral is something of value acceptable to a lender that acts as security for a loan or other form of financing. The asset may be real estate, securities, a cash deposit, or something else of tangible value, depending on the type of financing. If the borrower does not pay the loan back, the lender can assume control of the collateral in order to recover some or all of its losses.

Is Collateral Needed for a Line of Credit?

In reality, all lines of credit require some form of collateral. You may run across unsecured lines of business credit, but even in these, the lender can access your corporate or personal assets to make its loss whole again. However, it is true that collateral can come in several different forms. 

Consider Using your Business’s Sales as a Form of Collateral

Consider using financing options that utilize your firm’s future sales as a form of collateral. Some of these include:

Accounts Receivable Factoring

Funding received from the sale of unpaid outstanding invoices

Purchase Order Financing

Funding received for the purchase of inventory from a supplier

Asset-Based Financing

Funding is collateralized by an asset such as existing inventory or machinery.

Connect with Point High Finance

Point High Finance can offer your business the exact type of financing that it requires. This may take the form of a line of credit or an alternative, sale-based option. Give them a call today to learn more.