Keeping a balanced cash flow is perhaps the most difficult job for a small business owner. One month collections go up, and spending becomes easier. The next month expenses start adding up, and collections are nowhere in sight. At this difficult time, a line of business credit can be a lifesaver. This powerful financial tool can help you effectively smoothen out the kinks and help keep your business afloat.
A line of business credit offers the flexible accessibility of funds necessary to cover unexpected expenses and have cash available when needed during cash flow troughs.
How Does a Line of Business Credit Help Manage Cash Flow?
For small businesses, a line of business credit operates on a similar premise to a credit card, in that you’re extended credit up to a certain limit and you only make payments including interest payments on the amount of money you borrow. This can be a considerable benefit for cash flow concerns since you can rely on the credit line when you need it, using it to cover operational costs, meet payroll, or purchase inventory if it arrives before your payment does.
Bluevine offers strong business lines of credit, offering up to $250,000 in funds for businesses. With easy access to your money and no hidden fees, small business owners can manage their cash flow with fewer headaches than what they’d get with term loans. This is a trusted and efficient way to have a financial backup if your small business is going through uncertain times.
Smart Ways to Use a Line of Business Credit
While having a line of business credit is a great benefit, leveraging it well is key to keeping a healthy cash flow. Here are some great ways to use your business line of credit:
- Cover Short-Term Expenses: Utilize your line of credit to cover you when you’re in between needing to pay expenses and receiving potential incoming funds. This allows you to run operations smoothly without pause.
- Invest in Growth: If you’re looking to grow your product line, invest in marketing efforts, or hire additional employees, you can utilize a line of business credit to give you the capital you need to invest in your growth without affecting your existing operating budget.
- Don’t Use it for Long-Term Debt: A line of credit is not intended to be used as a long-term investment. Don’t charge so much that you have difficulty paying it off. Use it at your point of need and pay it back quickly to ensure it is available for future use.
When Should You Consider a Line of Business Credit?
Understanding when to use a line of credit can help you keep your finances in top shape. It’s best to leverage a line of business credit when your cash flow mostly runs smoothly and is only occasionally disrupted. A business line of credit provides you the flexibility to manage expected and unexpected costs, allowing you to focus on growth.
How a Line of Credit Can Be Your Business’s Financial Safety Net
Managing cash flow is critical to small businesses because it provides the flexibility to address any requirements or unexpected situations and position growth. Business line of credit helps you meet any obligations you may have, while also providing flexibility to invest funds as needed.
