Lines Of Credit

Chances are your business expenses aren’t exactly the same from month to month. Spikes in utility costs, accidents, supply chain disruptions, and seasonal fluctuations can put a strain on your cash flow.

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• Understanding

Lines Of Credit

A line of credit is there for you when you need it. Tap into your line when you need cash, and pay back into the balance when you can. Most lines renew, much like a business credit card.

Lines of credit don’t require a high credit score to qualify. You can use the value of your company’s assets to secure a line of credit. Then, borrow up to that value from the line. When you make payments back into the account, you free up the balance to be used again. Keep a line of credit for emergencies or to smooth out seasonal revenue depression. If you have a strong credit score, you can get an unsecured line, which allows you to borrow without putting assets up for collateral.

• How to effectivly use

Lines Of Credit

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For small business owners, it can be difficult to make up revenue during the off-season. If you count on one quarter to support your annual expenses, a line of credit can ease your capital worries. Tap into your line of credit when cash flow is down. Make payments to free up the balance when revenue is back up. A line of credit smooths out those seasonal cycles so you can keep business moving all year long.

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Financial emergencies can strike when you least expect them. If your cash flow is already strained, an emergency can turn into a disaster. That’s why it’s a smart idea to have a line of credit available to fall back on. Handle your financial emergencies right away and pay back the expense when you can afford to. Most lines don’t charge interest unless you have a balance on your account. That makes a backup line of credit an affordable way to guard against the unexpected.

Repairs

When your infrastructure breaks down, the faster you can handle repairs, the better. Fix plumbing, structural damage, cosmetic flaws, electrical issues, and more immediately. Don’t wait for a small flaw to become a major repair job. Instead, use a working capital line of credit to tackle it now.

Utilities

While your business’s revenue can be up and down, your utility bills continue to come in. If it’s your off-season, it can be hard to make those payments on time. Avoid late charges and disconnections by using a line of credit to pay the bills. You can borrow as long as you need to, provided you keep up with your monthly minimum.

Payroll

Do you need to hire new personnel to handle the busy season? Or retain staff during the off-season? A line of credit can help you manage your personnel needs as the seasons change, no matter what your cash flow looks like. As your new hires boost cash flow, you can reduce your balance to use when you need it next.

Advantages

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Flexible borrowing

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Easy to qualify

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Interest-free with a zero balance

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Fast and convenient

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F.A.Q’s

Q. What’s the difference between secured and unsecured lines of credit?

A secured line of credit lets you use real estate, equipment, or inventory to secure the loan. If you default on the loan, the lender can seize the collateral. An unsecured line of credit keeps these assets off the table. However, unsecured lines have stricter credit requirements.

Q. What is a non-revolving line of credit?

A line of credit is generally considered “revolving” credit, meaning your payments toward the balance let you re-borrow those funds later on. A non-revolving line of credit doesn’t replenish with each payment. Once your balance is depleted, the account closes.

Q. When is a line of credit not a good fit?

Lines of credit, with some exceptions, are best used for working capital needs or when you’re uncertain how much you’ll need to borrow. If you’re looking for real estate, equipment, construction, or refinancing options, talk to your broker about finding a loan tailored to those needs.

Q. Do I need good credit to qualify for a line of credit?

No, you don’t need a high credit score to qualify for a line of credit. A secured line of credit lets you use real estate, equipment, or inventory as collateral. This security allows lenders to extend credit to borrowers without worrying about their credit scores. Ask our brokers for further details.

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Our team is here to answer any questions and provide personalized guidance for your business’s financing needs. Whether you’re exploring options or need assistance with the application process, we’re just a message away. Reach out today and let us help you find the best financial solution for your business.