Why You Should Consider a Line of Credit Even When Business Is Good
Many businesses have periodic financial struggles, which makes it important to have a safety net ready for when you encounter emergencies. One of the most effective backup strategies for companies with intermittent cash flow problems is a line of credit. Here are some reasons why a line of credit may be the right financial solution for your business.
Keep Cash Flow Strong
It is not unusual for businesses to have difficulties with cash flow. Especially when they have seasonal lulls or encounter unanticipated expenses. When you have a line of credit, you can obtain the funds you need immediately instead of having to apply for and await approval for some other form of financing.
Pay Interest Only on What You Use
When you take out a traditional bank loan, you have to pay interest on the entire amount and make payments every month regardless of whether you are currently using the funds. However, a line of credit gives you access to a predetermined amount of funding whenever you need it. You only pay interest on the money you use. When you pay back what you have borrowed, you have access to it again.
Protect Your Assets
An unsecured line of credit does not require collateral. This means that your business and personal assets are safe even if you have difficulty paying back the funds you use.
Improve Your Company’s Credit Score
If you manage your company’s line of credit wisely by making all required payments on time, you can improve your business’s credit score. This will make it easier for you to qualify for other forms of financing such as a bank loan if you require additional funds later on to grow your company. Be sure to only withdraw the amount you need from your line of credit so you won’t face any difficulties paying it back.
For more advice on obtaining a line of credit for your business, get in touch with Quick Capital Funds.