There are several types of commercial equity lines of credit (CELOC). A commercial equity line of credit offers new or existing businesses working capital. Sometimes, the line of credit is backed by equity or collateral. In exchange, companies can obtain cash for various expenses, such as renovations, repairs or purchases. Typically, these expenditures can be paid off easily or in the short term. As a business owner, you can access your money through cash, checks or other business finance sources using a line of credit. Here are the different types of commercial equity lines of credit.
Small Business Equity Line Of Credit
First, you can open a Small Business Association equity line of credit. SBA CELOCs can be a reliable financing tool for your company. They provide quick cash options, lower interest rate solutions and flexible financing features. You can access cash whenever you need it. In fact, you can have and keep your CELOC in your back pocket until there is a reason to use it. As a result, you can avoid going to a bank to take out an expensive loan when there is a business need or emergency. Additionally, CELOCs usually offer reduced interest rates compared to other revolving credit lines. More so, a SBA CELOC can cover almost any business-related expense. For example, needing an office repair or new equipment. Certainly, a small business equity line of credit is a top type of CELOC.
Traditional Secured Business Line Of Credit
Secondly, a top CELOC is a traditional secured business line of credit. Traditional secured business CELOCs rely on collateral. For example, you would put up a valuable possession, whether it be a business asset, major equipment or a piece of real estate. As a result, if you fall behind on payments, the commercial lender can claim your collateral as repayment. More so, since the risk is lower, you may receive better overall terms. These include potentially reduced interest rates and flexible repayment terms. In fact, you may even qualify for an increased line of credit. Surely, traditional secured business lines of credit may be a reliable investment for your business.
Business Credit Cards
Moreover, business credit cards are also a line of credit. These corporate credit cards are most suitable for newer businesses with limited ongoing finances and without established finances. Use business credit cards, such as the best Visa cards, for all business expenses, renovations or updates. Like other lines of credit, you take out money and pack back what you’ve used. Moreover, credit cards usually offer rewards and cash back. Rewards are usually for business related expenses including gas, cable/internet options and office supplies. Additionally, you may receive 0% interest promotions where you don’t have to pay interest on your balance for a predetermined time period. Of course, if you need to fulfill small expenses, consider a business credit card as your line of credit.
Unsecured Commercial Line Of Credit
Another CELOC type is a unsecured commercial line of credit. This line of credit is not backed by any collateral. Therefore, it is more risky for the lender. As a result, the credit is typically offered with increased interest rates and a reduced borrowing limit. Additionally, it may take a lot more time and energy to obtain an unsecured commercial line of credit. The lending institution implements a more thorough evaluation process. In fact, your company will have to submit a sound financial profile. Of course, you can only receive an unsecured CELOC if the institution agrees and approves that you are a reliable recipient. Certainly, you can consider using an unsecured commercial line of credit to support your business.
Real Estate Equity Line Of Credit
Of course, you can also access real estate equity lines of credit. You can access these funds multiple times over a span of anywhere between 12 and 180 months. Additionally, you can make payments on your short-term financing solutions until you pay off your balance instead of having to make monthly payments. Real estate CELOCs can be used for trade discounts, investment or inventory finances or to expand your real estate operations. More so, you can take out capital for property improvements and construction on owner-occupied commercial buildings. In fact, CELOCs help improve liquidity, increase working capital and meet short-term cash requirements. Definitely consider real estate lines of credit if you are in need of short-term commercial property financing options.
There are various commercial equity lines of credit options. Consider a small business CELOC for business-related emergencies, renovations or purchases. Secondly, you can open a traditional secured business line of credit by putting up a valuable piece such as real estate property or company assets. Additionally, you can receive an unsecured commercial line of credit with sound financial statements and thorough evaluation procedures. Of course, you can access a real estate equity line of credit for assistance with short-term commercial property funding options. Finally, consider a business credit card if you are a new or starting business and need smaller payment solutions. These are the different types of commercial equity lines of credit.