When starting and running a small business, it is impossible to imagine all of the financial situations that may arise. Even if your budget for your startup loan is dead on, there are likely going to be unexpected expenses that pop up requiring extra funds. Where are those funds to come from? Of course one option is to go back to the bank and ask for more money, but that is a lot of waiting and red tape.
Once the business is up and running, there could be numerous unexpected issues that interrupt cash flow. For example, open invoices, unforeseen equipment needs, storm damage, and fantastic new inventory opportunities all require funds that may not be available from regular cash flow or from previous loan proceeds.
What is the answer? A business line of credit is perfect for these types of expenditures.
How Does it Work?
A business line of credit can help bridge cash flow gaps, meet unexpected purchase needs, and even fund small repairs. A line of credit for a new business can provide that extra cushion that is almost always needed during the startup period, offering the business owner peace of mind and freedom without having to go back to the bank so soon after opening.
The mechanics are similar to a credit card, but with much better terms. A business line of credit is a revolving line of credit with a limit, which can be used just like cash. This means it can be used to meet regular expenses incurred during the course of business if cash flow is slow, or it can be used fix the copier that just busted or replace the computer that just bit the dust.
Better Than a Traditional Loan
The advantages of a business line of credit over at traditional loan are obvious. Going back to the bank each time one of these needs presents itself is inconvenient, time consuming, and expensive for both the borrower and the lender.
Better Than a Credit Card
While a business credit card can do basically the same things, business line of credit rates are generally much more favorable. The terms are generally better as well, and if you go through the same lender that was used for startup funds, the line of credit could be easier to procure.
Biz2Credit specializes in helping small business owners find the financing tools they need to help their business thrive. Our network of over 1,200 lenders is waiting for you. Visit us online at Biz2Credit.com today for more information.