Business Line of Credit | Requirements, Types – How does it work?

business line of credit

Funds are the backbone of any business, especially at the growing phase for small and medium organisations. Although there are plenty of options available to fund a startup yet the business line of credit is the most popular and convenient method to get access to a fixed amount of money for businesses.

Even if, many other sources of finance available to small businesses or startups, but the lines of credit could be the best and easy to obtain as other options have lots of hassle, requirements and involve numerous complicated procedures.

Hence in this article, we shall go through the meaning, types, functions and requirements of a business line of credit. Let us first understand what exactly the business lines of credit are?

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Difference between Buyer’s Credit and Letter of Credit

difference between buyer's credit and letter of credit

Buyer’s Credit and Letter of Credit, both are utilised during cross border trade between two parties (importer & exporter). Though both seem similar term, but are completely different from each other and hence shouldn’t be misunderstood similar.

This article intends to distinguish between a letter of credit and a buyer’s credit based on every significant perspective.

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Supplier Credit | How does it work? | Explained

supplier credit

In the case of high-value international transactions, there is always a requirement for a credit to promote export businesses of a country. Hence, the Trade Credit has a significant role in cross border trade/ transactions.

There are basically, two types of trade credit viz buyer’s credit & supplier credit. For detailed information about the Buyer’s credit follow the link below.

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Buyer’s Credit | Explained – Meaning, Process, Pros & Cons

buyer's credit

In cross border trade, there is always a credit risk for both buyer and suppliers because both are unknown to each other and at the same time, different legality/ sets of rules are applicable to different countries.

In this circumstance, Buyer’s Credit plays a vital role during international transactions and facilitates such international deals with negligible chances of default.

In this article, we will understand, what exactly is the buyer’s credit? And how it facilitates the export & import of goods/ services around the globe. Apart from this, we will also discuss, the mechanism of issuing buyer’s credit and how it is settled between buyers and suppliers.

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Lines of Credit vs Letters of Credit | 6 Aspects You should know

lines of credit vs letters of credit

The businesses whether they are small, medium or large, require working capital funds some or other day for their day to day operations.

The first and foremost thing that comes to mind when it comes to credit/ loan, is traditional business loans, personal loans. However, there are some other options available that are favourable and convenient to small or medium business owners.

In this article, we will discuss prominent credit facilities available for businesses to cater to their requirements of working capital funds. However, the most prominent credit option available for businesses is the letters of credit and lines of credit.

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