A Line of Credit... Just in Case
Between a line of credit and a loan, there exists a particular kind of credit vehicle known as a working capital demand loan. Combining aspects of both credit lines and loans, this method of financing utilizes the strengths of each to deliver a flexible and low-cost way for businesses to fund working capital requirements during temporary periods of low revenue or unexpected shortfalls in their working capital accounts.
Business credit can be the difference between a smoothly-run operation and a waking nightmare. Contrary to the naysayers, credit is, in fact, a powerful tool necessary for the proper operations of most small and medium-sized businesses. It allows for the prompt payment of bills and expenses, helps deal with emergent and unexpected situations, and generally makes one’s financial life significantly easier.
You may have heard of a business line of credit and wondered why you’d ever need one. After all, your business is doing well and there is plenty of cash to pay the expenses. You don’t need a loan, right?
The truth is it’s not that simple. Business lines of credit have multiple uses beyond being a source of funds for business owners to pay for large capital expenses. From cash flow flexibility to being an alternative to expensive cash reserves, business lines of credit can come in handy for any small business owner. Read on below to find out how!
An emergency business line of credit is exactly what it sounds like. It is revolving credit intended for business-related emergencies. A line of credit has no debt maturity date or repayment plan, rather the borrower is free to use as much or as little of the credit line as they choose. They make monthly payments that include interest only on the amount used from the credit line, not the lump sum. This is much different from a business loan where the business owner would make month payments on the entire amount borrowed, likely at higher interest rates.
Henry Daas, talks about what business owners should do about their own personal finance instead of their businesses. Mr Daas is a serial entrepreneur, business and financial coach, screenwriter, and the recent author of FQ: Financial Intelligence. When Henry isn’t working, he is an avid traveler, golfer and tennis player. He has been married for […]
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The Small Business Administration (SBA) is an agency of the United States federal government. Its mandate is to assist small American businesses with launch, survival, expansion, growth, and recovery. It does this by providing eligible American small businesses with access to resources and funds. These resources include things like online courses and access to skilled […]
So, you’re part of a non-profit in need of a capital infusion. You’re in the market for a loan but you don’t know where to begin. Can a non-profit get a small business loan? What are the terms likely to be? Is it a responsible course of action? Read on for some quick tips on […]