Small businesses can go under if they don’t have a handle on cash flow. Obtaining capital when needed shouldn’t be a hassle, and if you run a business, you want to know how you can keep your cash flow current and prevent cash shortages. The truth is, if you don’t have a backup plan for getting capital when an emergency strikes, then your business could be in trouble. This is where lines of credit come in handy.

The Benefits

Why would you want lines of credit for your business? You may feel like things are running smoothly now, but if you had customers suddenly leave or lose a large client, how would your cash flow look? Lines of credit will help your business have the capital to tap into when your business needs to keep things running smoothly. 

Lines of credit don’t have to be utilized in emergencies only; they can also benefit your business by allowing you to have the capital needed to expand, hire additional staff, or update equipment. 

Flexible Spending

When your business obtains lines of credit, the amount of funds you use or save for later is up to you. Whereas, with a bank loan, you have to apply for a certain amount, have a fixed monthly payment, and pay interest on the full amount of the loan. With a line of credit, you only take what you need when your business needs it. Not only that but interest payments are based on what you use, not the entire line of credit amount.

Good Rates

Business lines of credit come at a lower lending rate, much better than a credit card. Although the interest rate does fluctuate, you’ll garner a better percentage than that of a corporate card. So long as you make your payments on time, that rate will stay on the lower end, leaving you access to additional capital and higher limits. 

Staying Ahead

Taking advantage of all a line of credit offers is good business. Overspending when it isn’t necessary is not good business. Lines of credit are meant to be used for company growth and to keep cash flow current. Overspending where your business doesn’t need it can lead to issues with cash flow, making it hard to keep payments current and causing a halt on your credit line.  

Lines of credit offer huge benefits to small businesses. From a lower interest rate to flexible spending, and keeping cash flow available, your business will have access to funds when they need them. So long as you don’t overspend and make your payments, you’ll keep your line of credit working for you.