What Does a Business Line of Credit Do For a Small Business?
Financial experts recommend a variety of tools for business success, but many entrepreneurs may wonder what a business line of credit can do for a small business. The short answer is, a lot.
How Can a Business Line of Credit Help Your Small Business?
It has been said that money cannot buy happiness. However, most people cannot be happy without it.
To run a small business, it takes money, and plenty of it. When you don’t have enough of it, disaster ensues. You might not be able to make payroll, purchase supplies and equipment, pay business taxes or expand your business. In extreme cases, running out of cash may cause you to go out of business altogether.
Usually, you cash flow shortage is temporary, the result of an accounts receivable gap. This occurs when you have to wait 30, 60 or 90 days for your clients to pay but you still need to handle daily operating expenses and make payroll today.
That’s where a business line of credit can help. A business line of credit is a type of loan that you can use to build up your working capital. This is a necessity in today’s business world, where many things still need to be paid in cash.
When you experience a cash shortage due to slow sales or any kind of emergency, you can borrow the funds from your business line of credit, instead of taking the money from other areas of your business. With a business line of credit, you don’t have to take funds from marketing initiatives to make payroll or dip into your product development budget to expand inventory.
What is the Best Way to Get a Business Line of Credit?
Comedian Bob Hope once quipped that a bank will lend you money as soon as you can prove that you don’t need a loan. At a traditional bank, it can be difficult for a small business to get a business line of credit. You may need to have enough collateral to secure the loan or have an established relationship with the bank prior to applying for a business line of credit.
A better way to get the quick business funding you need for a business line of credit is with a cash advance company, like Financing Solutions (www.fundmypayroll.com). Using your account receivables, you can get cash based on their value. The process is fast and easy. You just have to answer a few questions to be approved and you can get access to the cash you need in 48 hours or less.
Best of all, you can repay the funds in a couple of weeks or months. This means that there is no long-term commitment.
Is There More Than One Type of Business Line of Credit?
Credit is a strange concept. Even when we don’t have any money, we feel more financially secure knowing we have credit to make an immediate purchase.
There are different varieties of business lines of credit to choose from. Your eligibility depends on your business and your relationship with your bank. You should also understand that there are different fees and interest rates required.
Most banks offer a secured line of credit, for which you must show enough collateral to cover the loan. This involves you using property, accounts receivables or other assets to secure the loan. You may also be eligible for an unsecured line of credit from your bank, which is generally only offered to those with a stellar credit history.
It is important to carefully consider the terms of any short term business loan before making a decision on what is right for your small business. Once you have all the facts, it will be clear that applying for business financing from a cash advance company is the best option.