Looking for Financing? Check into a Line of Credit

Last week we discussed why having a line of credit is a good idea in case of an emergency, but what exactly is a line of credit? Why should you look into having a line of credit, and how do you go about getting one?

A line of credit is a fixed amount of money that a company can draw against from a lender, usually a bank.  A line of credit (LOC) gives your business access to cash, whenever you need it. A business is allowed to draw from the line of credit at any time, as long as it doesn’t go over the maximum amount set.

Why should you look into applying for a LOC? What draws businesses to a line of credit is that fact that unlike a regular loan, interest is not charged on what isn’t used. A LOC helps businesses by accommodating fluctuating credit demands. When small businesses face increased inventory, emergencies, and cash flow shortages, a line of credit is there to help ease the tension. They also help to increase your business’s cash flow by allowing you to extend payments over time in case you don’t have the money to pay everything off in full.

There are a few things you need to have handy when going to a lender to apply for a line of credit. Lenders want to make sure you will be able to pay them back even if problems arise. Just like with a loan, lenders will expect you to provide them with financial statements, income statements, balance sheets, and a cashflow statement. Having this information handy, along with paying the lenders back in a timely manner, will help your business qualify for larger capital sums down the road and even lower interest rates on future business loans.

A line of credit is a great option for small businesses to help maintain a healthy cash flow and provide a convenient form of financing.

Last week we discussed why having a line of credit is a good idea in case of an emergency, but what exactly is a line of credit? Why should you look into having a line of credit, and how do you go about getting one?

A line of credit is a fixed amount of money that a company can draw against from a lender, usually a bank.  A line of credit (LOC) gives your business access to cash, whenever you need it. A business is allowed to draw from the line of credit at any time, as long as it doesn’t go over the maximum amount set.

Why should you look into applying for a LOC? What draws businesses to a line of credit is that fact that unlike a regular loan, interest is not charged on what isn’t used. A LOC helps businesses by accommodating fluctuating credit demands. When small businesses face increased inventory, emergencies, and cash flow shortages, a line of credit is there to help ease the tension. They also help to increase your business’s cash flow by allowing you to extend payments over time in case you don’t have the money to pay everything off in full.

There are a few things you need to have handy when going to a lender to apply for a line of credit. Lenders want to make sure you will be able to pay them back even if problems arise. Just like with a loan, lenders will expect you to provide them with financial statements, income statements, balance sheets, and a cashflow statement. Having this information handy, along with paying the lenders back in a timely manner, will help your business qualify for larger capital sums down the road and even lower interest rates on future business loans.

A line of credit is a great option for small businesses to help maintain a healthy cash flow and provide a convenient form of financing.

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