Lines of credit have often been used as a cash management tool because they basically act as a buffer for your reserve cash. This works well for a few reasons, but it is worth pointing out that not all credit lines are equal. For access to a decent pile of working capital and low enough interest rates to make it the best option, you need to have assets you can use as collateral. Secured credit lines are typically approved for a fraction of the cost of unsecured lines and several times their size.

Securing Commercial Credit With Real Estate

The most common form of collateral for business credit lines is commercial property. This makes it ideal for companies that own their facilities, even if there is a commercial mortgage in place. The credit line can be based on the available equity, and as you pay off the primary financing it can be expanded to take advantage of additional accrued equity. This lets you expand your access to capital as your company flourishes.

The best part? Lines of credit allow you to simply draw cash into your account as needed, so if there is an available balance you have on-demand capital with no need for an approval process. That’s why so many companies rush to set them up once they have the tools to do so.

Cash Advance Capital Without Interest Costs?

It might be hard to believe, but you can often access a credit line for free, minus your annual fees if there are any on the account. It’s a limited perk because it takes advantage of the short window between your withdrawal and interest being assessed. Sometimes it is as little as a week, but often it is 30 days before you have any interest assessed on the debt. That gives you time to pay a bill and then collect on invoices before it even costs you to float the short-term debt.

Can any other debt tool offer you a chance to use free short-term bridge financing once in a while? Typically, the answer is no. It’s a perk that is built into the structure of business lines of credit to give them a distinguishing feature beyond their low interest costs. While it takes time to build up the assets that make credit lines this attractive, once you have them you can access the tool that is designed to provide you with short-term capital at the lowest possible cost. That tends to be a turning point for any small business.