One of the greatest difficulties many businesses face is uneven cash flow. One month your finances may experience smooth sailing, while the next, they drop below acceptable levels. Business lines of credit allow you access to cash when you need it to stabilize your financials.
Here is some information to help you decide if this option is right for your business.
Find a Lender
Business lines of credit provide you with access to a predetermined amount of funding on a revolving basis. Unlike a traditional loan, which is distributed in a lump sum, once you are approved for a line of credit, you withdraw and pay interest on only the amount you need when you need it. Although traditional banks offer lines of credit, requirements are strict, so if you’re a startup you may have more success applying to an alternative online lender. You’ll need to provide your company’s financial information such as tax returns, income statements, and credit rating.
Stabilize Cash Flow
Strong and steady cash flow is an imperative for any business. Once you are approved for a line of credit, you have funds available that you can draw on in times of need. For instance, you can access cash if there are seasonal downturns, unexpected delays in client payments, or emergencies such as natural disasters. With lines of credit, you have the flexibility to use the funds for whatever your business requires.
Improve Your Credit Rating
As you use your business line of credit and make timely payments, you have the opportunity to boost your company’s credit rating. Improving your credit history allows you access to further loans and lines of credit as your business needs them to spur growth in the future.
For more advice on lines of credit and other financial products for businesses, get in touch with Capital Connex.