New business owners, take note: A line of credit can be just as effective as a more traditional term loan when it comes to working capital needs
Despite the incredibly challenging circumstances of the last year-plus, entrepreneurs are still taking the leap into small business ownership at an impressive rate. However, securing funding for working capital needs can be just as demanding as business operations themselves, especially when their small business is not yet established enough to qualify for traditional financing options like an SBA loan or a business credit card.
Having lending options available that provide quick access to cash and flexible repayment options is essential, and that starts with the right lending partner who can help you can take the stress and uncertainty out of financing. If you’re an entrepreneur who recently started a small business, read on to learn more about why a line of credit may be exactly what you’re looking for.
How a small business line of credit works
A line of credit is a flexible loan that makes a defined amount of money available on an as needed basis and is repayable either immediately or over time. Lines of credit are similar to term loans in that they charge interest at the time funds are borrowed and require approval from the bank, but differ in that funds aren’t disbursed when you open an account that you then have to pay back monthly thereafter.
A line of credit has more in common with a small business credit card in that both provide access to funds subject to limits that accumulate interest over time. Small business lines of credit, however, offer lower interest rates than most small business credit cards.
For many businesses, lines of credit are most often used for day-to-day expenses like inventory, supplies and operational costs to account for the variability of irregular monthly income and unexpected expenses, or to finance a project with unpredictable costs.
Why a small business line of credit can benefit a new business
Lines of credit can open doors for your new business by helping you approach financing in a strategic and thoughtful way. Lines of credit give small business owners access to capital that allows them to take advantage of opportunities or meet other short-term needs that can make a difference when building a thriving business.
By making a specified amount of money available if and when the borrower needs it, lines of credit help small business owners avoid the complexities of being granted a loan, paying it back, then needing another loan again. They are easier to obtain for new business owners who may not be established enough to secure a loan or a credit card, plus they also help build a credit profile.
Lines of credit are also useful in situations where there will be repeated cash expenditures, but the amounts may not be known upfront, a common theme in the start-up process for many small businesses.
Why small business owners should consider an Easy Access Line of Credit from Wintrust
As a new business owner, you have a lot to keep track of. Regardless of where you are in your journey, your immediate cash needs are within reach, even if you have been denied financing in the past. Wintrust’s commitment to community starts by closing the lending and credit gap that small business owners face and finding the right solution for their needs. Our bankers take the time to get to know you and proactively create personalized financial plans for your business and your goals.
If you are a sole proprietor managing a small team of employees, consider an Easy Access Line of Credit from Wintrust to cover unexpected expenses, inventory purchases, and day-to-day costs. While most banks set limits on what new businesses are allowed to borrow, we recognized how difficult this can be—especially for new business owners—which is why we built this line of credit specifically for businesses less than a year old. Our Easy Access Line of Credit1 provides a flexible financing solution up to $5,000 at a variable rate lower than most credit cards. That is why it is a great fit for small business owners, especially those working hard to gain their footing and really become established. Even if you are a part of an ownership duo or team, Wintrust’s Easy Access Line of Credit may be the right option for your small business if you are making regular, large purchases necessary to keep your business running smoothly.
Partner with a bank as invested in the success of your business as you are. As committed, established members of our communities, we operate differently than the big guys. Decisions about credit and loans are made right here by a local team, so you can feel confident that your fate has not been left up to someone far away behind a screen. Plus, we offer Money Smart financial education courses for business owners, so you have somewhere to turn for resources and training. We are here to tell you: Wintrust is committed to closing the credit gap.
Wintrust has the right offerings of financial solutions for your lending and credit needs, designed with entrepreneurs like you in mind. Learn more about Wintrust’s Easy Access Line of Credit here.
1. Easy Access Line of Credit. Requires company’s primary checking account to be with the bank. Business must be in operation and in business for 12 months or less. Location of business must be in a low or moderate income census tract and be in a Wintrust Community Bank CRA assessment area. Subject to underwriting guidelines. See a personal banker for details.