Accounting Firm Uses Line of Credit - Biz2Credit
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Accounting Firm Uses Line of Credit to Meet Heightened Seasonal Demand

Accounting Firm Uses Line of Credit
Background

An entrepreneur owns and operates a CPA/Tax Preparation company with growing annual revenues around $1.8 million for 2006. The company is headquartered in New York. Every tax season the owner experiences an increase in demand for accounting services.

The Need

In order to meet the seasonal demand, the owner needed financing to increase payroll and expand service capacity.

Financing Solution

After reviewing the business and personal financials of the entrepreneur, Biz2Credit recommended taking a line of credit against the strength of the business and personal credit of the owner. A regular term loan exposed the owner to unnecessary risk. If the new customer demand did not meet expectations, the owner would still have to pay the interest on the loan amount. However, with the line of credit, the owner could increase payroll as new clients were added and only pay interest on the amount used. Biz2Credit surveyed various financial options and zoned in on two lending institutions. The owner received a secured line of credit at $250,000 at prime rate.

Results
  • Received a line of credit of $250,000 within 14 days
  • Line provided at Prime rate
  • Increased annual revenues by over $200,000
Benefits
  • Additional working capital to service heightened seasonal demand
  • New and expanding customer base
  • Ability to increase payroll in steps instead of hiring all at once
Tagged in
Professional, Scientific, and Technical Services Finance and Insurance
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