Does getting a business line of credit seem like a daunting task? If so, you’re not alone. Many small business owners are hesitant to take on this type of debt. But before you write off a business line of credit, consider term loans. Term loans can be an excellent option for small businesses that need financing but don’t want to commit to a long-term contract.
How Business Lines of Credit Can Stifle Startup Growth
A line of credit can cast a cloud of uncertainty over a business. The revolving nature of the loan gives business owners little clarity into their future finances, making it difficult to plan for growth or make long-term investments. Additionally, business lines of credit typically come with higher interest rates than term loans. This means that you’ll end up paying more in interest over the life of the loan. And if you’re careless with your debt obligations, you could find yourself in a cycle of debt that’s difficult to escape.
So, What’s Term Loan? And Why Should Startups Take This Route?
A term loan is a business loan with a fixed interest rate, repayment term, and monthly payment. A term loan gives business owners the clarity and certainty they need to make sound financial decisions and plan for future growth. Having fixed interest rates means you know how much your monthly payments will be, making it easier to budget and forecast your cash flow. And because the repayment term is typically shorter than a line of credit, you can get out of debt sooner and focus on growing your business.
Other Benefits of Opting for Term Loans
In addition to the benefits mentioned above, business owners may also enjoy:
- Lower interest rates: Interest rates on term loans are typically lower than those on lines of credit.
- Access to more capital: You can usually borrow more money with a term loan than you could with a line of credit.
- Tax deductions: The interest you pay on a business term loan is tax-deductible
- Fast approval: The approval process for a business term loan is usually quicker than for a line of credit.
- Use operational cash elsewhere: Unlike other business loan types, founders and entrepreneurs can use business lines of credit for anything they want. If you want to revamp your office space or get your hands on the machine your system you need, a term loan can help you out either way.
If you’re a business owner looking to finance your business, a term loan may be the right solution. With its many benefits, a term loan can help you get the funding you need to grow your business and succeed in today’s competitive marketplace.
Many small business owners feel lost when trying to get their businesses off the ground. That’s where we come in. At 7 Figures Funding, we pride ourselves as experts in small business funding. We can help you find the ideal loan for your needs and walk you through the application process so you can get funded fast in Orlando, FL.
Don’t wait any longer- get started today!