Rather than apply for a strict, traditional loan, small business owners should first apply for a business line of credit to help make purchases. Below are five good reasons to use a business line of credit.

1. Low Interest Rates.

Business lines of credit have a low interest rate compared to personal credit cards. The interest rate will fluctuate because lines of credit usually follow the prime lending rate. If you continue to pay back the line of credit on time, you will keep a low interest rate.

2. Flexibility.

Business lines of credit give you unparalleled spending flexibility. Instead of using a loan for a specific purpose, like a mortgage, a line of credit is for whatever purchases you need to make that month. It could be more inventory, employee uniforms, or a company-wide lunch. A traditional loan requires the same payment monthly, but a business line of credit only charges interest on the amount you spend monthly.

3. Improve Credit Score.

In order to secure a traditional bank or Small Business Administration loan, you need strong credit. Without a proven track record of being a reliable borrower, it will be hard to secure large loans to make large purchases for your business. Applying for and securing a business line of credit will help you build a strong credit score. This will also give you the opportunity to prove your worth to lending organizations and hopefully secure large loans in the future.

4. Better Control Over Spending.

Instead of making the same payments to a bank every month with no flexibility, a line of credit is revolving. Once you pay back what you spent, you will receive access to those funds again. This gives you more control over your business’s expenditures. You can also plan for specific purchases well in advance because you can see when the credit will be available to you based on your past payments.

5. So Many Perks.

When you make purchases with your line of credit, you may be rewarded by the lending company in some capacity. Imagine taking your cash back and putting it into expansion, health insurance, or marketing plans. If your business requires frequent travel, you could take your credit points and turn them into air miles. Any time you can help your business financially is worth the effort.

Before choosing a specific line of credit for your business, make certain to do your research and decide what will work best for your business.