Within days of registering a company name and receiving a tax ID, entrepreneurs find themselves inundated with offers for new business lines of credit. The truth is that having an extra source of working capital from a business line of credit can be very useful. However, lines of credit come in secured and unsecured varieties, and it is helpful to understand how each type works.

Secured Lines of Credit

Secured lines of credit require some form of collateral in order to access funds. For businesses, credit providers typically place a lien against assets as collateral for funding. These assets typically include:

  • Receivables
  • Inventory
  • Equipment
  • Real Estate
  • Capital
  • Vehicles
  • Securities

Once secured, business lines of credit function the same as personal credit cards. Businesses can make purchases as necessary, and then pay down the balance plus interest. If the balance is not repaid, the credit provider can leverage any collateral plus fees.

Unsecured Lines of Credit

Unsecured lines of credit do not require collateral. New and small businesses that may not have the credit ratings or collateral to get approved for secured lines of credit can access unsecured lines of credit without any issues. Unsecured lines of credit function just like regular lines of credit, offering business owners a source of discretionary capital with revolving and non-revolving options. Discretionary capital simply means that businesses can use their unsecured lines of credit for whatever they need. A revolving line of credit is one where the amount available is replenished as the balance is repaid. Unsecured lines of credit are preferred by new and small businesses because they are accessible, have competitive rates, and do not require any collateral to secure funds.

Learn More Today

Golden Century Lending offers unsecured lines of credit to new and existing businesses with low, competitive interest rates. We can also increase credit limits as your business grows, so you will always have a reliable source of working capital without sacrificing collateral. To learn more, contact Golden Century Lending today.