Most businesses need additional financing at some stage of their growth, and one option to consider is a business line of credit. Lines of credit allow you access to a fixed amount of funds that you can draw on when it is needed. They are generally easier to obtain than traditional loans. Approval may depend upon your personal credit score, the amount of time your have been in business, and your company’s revenue.
Here are some tips on how to use lines of credit.
Have It Standing By
After your application for a line of credit has been approved, you have the cash available to you whether you use it or not. If you don’t need it, let it remain dormant. However, draw on it when your cash on hand is insufficient to purchase inventory, upgrade equipment, hire extra personnel, or fund further growth.
Use It With Other Financing
Lines of credit can be used together with other methods of financing because they are unsecured. For instance, you can use your line of credit along with a traditional loan or the factoring of your accounts receivables to obtain the full funding that you need.
Build Your Credit
You can use your business line of credit as a tool to strengthen your credit score. As long as you pay back whatever you borrow in a timely manner, your credit score will continue to rise, increasing the financing options open to you.
Save on Interest
The interest rates on lines of credit are generally less than those on business credit cards. Additionally, you only pay interest on what you borrow, not on the full amount of the credit line.
Prepare for Emergencies
Lines of credit are extremely flexible means of financing. You can use your line of credit to grow your business, or you can refrain from using it except in emergency situations. It’s up to you.
For more advice on lines of credit and other financing options, contact Proactive Funding Solutions.