Lines of
Credit
Lending Overview
Lines of Credit
It’s normal for a business to experience ups and downs in revenue. For seasonal businesses, those fluctuations are more pronounced. Most of the company’s revenue might come from just one quarter. If sales don’t go as planned, cash flow could be tight for the other three quarters of the year. Lines of credit smooth out the seasonal cycle, allowing businesses to access working capital as needed. Lines of capital can be secured with business assets or unsecured as credit-based funding. Once a credit limit is established, the business can borrow as many times as needed within that limit. Payments into the account can be borrowed again later. Lines of credit are considered “revolving credit,” much like a business credit card. However, lines of credit are typically easier to qualify for, more cost-effective, and offer higher limits. They’re just as easy to access via cards, mobile apps, and online transfers. Ask a broker for the best deals on a business line of credit today.
Smart Strategies
How to Effectively Apply Funds
The flexibility of business lines of credit enables you to use them for anything your business needs. Most businesses use them as a convenient source of working capital: open-to-buy, office supplies, utility bills, payroll, and the like. If you’re a seasonal business, you can use a line of credit to ramp up materials and supplies during the off-season based on operational forecasts for the coming year. As pay from jobs comes in, you can pay back into the account to prepare for the next cycle. A line of credit will stay open as long as you’re making payments per your lender agreement. That means you’ll have an easy way to access capital that’s always there to support your business.
Advantages of
Lines of Credit
Lower interest rates than credit cards
Higher borrowing limits
Choose a secured or unsecured line
You don’t need good credit to qualify
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Tailored Lending Solutions
Flexible funding to cover your ever changing needs
Payroll
Whether you’re catching up with payroll expenses or hiring new staff, you can handle it with a line of credit. Lines of credit are there for you when cash flow isn’t what you expected. Plus, they stay open, so you can hire temporary staff on a seasonal schedule. Ask your broker to find the best line of credit for your payroll needs.
Materials
If your business growth is limited by your ability to bring in materials, use a line of credit to get what you need. You can take on larger orders faster and keep your customers satisfied. Once you deliver, pay into your account to borrow again later. You only pay interest on the balance in your account.
Backup
The problem with emergencies is you never know when one will strike. A line of credit is the perfect backup plan for when problems arise. Since you won’t pay interest on a zero-balance account, keeping a line of credit open is a low-cost way to get working capital in a hurry.
FAQ
Frequently
asked questions
Q. What is a secured vs. unsecured line of credit?
A “secured” line of credit means that you’ve used collateral to secure your loan. An “unsecured” line doesn’t require collateral, but you do need a good credit score to qualify. Ask your broker about more options.
Q. Line of credit vs. credit card - which is better?
Although both credit cards and lines of credit offer easy access to working capital, one is more affordable. Lines of credit don’t require a high credit score and offer higher credit limits than business credit cards. Interest rates on lines of credit are also typically lower than credit card rates. Find out which one is right for you by speaking with a broker today.
Q. Where can I get a business line of credit?
Several types of lenders offer business credit lines, including banks and private lenders. If you want to compare lenders for the best deals and get access to exclusive offers, your best option is to work with a qualified broker.
Q. What if I have bad credit?
Lines of credit are available no matter what your credit looks like. If you’re concerned about your credit score, opt for a secure line of credit that will let you borrow based on the value of business assets. A broker can help you find the best line of credit for your business and offer credit repair solutions.
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