If you are in business for yourself, a line of credit can be a powerful financial tool. Even if you already have a credit card or a personal loan to cover your business expenses, the line of credit offers many advantages:
1. It is a safety net. Self-employed workers sometimes have to wait additional time to get paid, if clients are late with payment. A line of credit helps prevent such emergencies.
2. It is less expensive than a credit card. A line of credit usually has a more advantageous interest rate and in many cases lenders allow you to draw checks or withdraw cash from a line of credit at no extra charge.
3. It is a good idea to have a cushion, which a line of credit can provide. Self-employment sometimes can mean feast-or-famine cycles and a line of credit ensures a steady access to cash when needed. This is especially important since some lenders may be reluctant to offer payday loans or personal loans to self-employed persons.