How Can a Line of Credit Help My Business?
If you are a small business owner, you have most likely heard about the option for a business line of credit. Running a business to provide self-funding while needing funding to keep up with that business can quickly slip into a catch-22. Luckily, if you ever find your business in this position, a line of credit is a great way to gain short-term funding to keep your business up and running. Functioning like a credit card for your business, a business line of credit can have a huge positive impact on a small business’s well-being. To help you decide if it is the right path for you, here are four ways a line of credit can help your business—
Create an Improved Cash Flow
A business line of credit is different from traditional commercial loans, as it lets the business draw from the loan whenever needed instead of all at once. With this flexibility of spending and the personalization that comes with a line of credit, you will be better able to manage your business’s cash flow and be more prepared for each new expense without the overwhelming task of separating the funding from a business loan into expenses.
Help You Cover Unexpected Expenses
Things break, demand rises, mistakes happen—an unexpected expense can come from anywhere. Regardless of if your small business is new, old, thriving, or struggling, an unexpected expense can be very damaging if you are not completely prepared. Having a business line of credit open can help lessen the fear of these unplanned expenses since you will have the funds required to cover it readily available without the worry of it hurting your business or credit.
Finance Inventory and Pay Employees
We know that keeping a business running is hard work and that no business owner should ever have to make the decision between keeping their stock/facilities up to their standards and paying their employees on time, risking one or the other every pay period. This is why a line of credit is a great option for businesses just starting out that might not have all of the necessary funds to keep every part of their business running yet.
Building Relationships with Lenders
As a business, having a strong relationship with lenders is one of the best things you can do to make sure you stay up to date with your finances. The personalized nature of a business line of credit, whether it is the amount you choose to take out or the repayment schedule, requires you and your lender to have
in-depth discussions about your business’s needs and aspirations. With this kind of relationship, you have a better chance of getting a commercial loan in the future, if needed and building a great credit history that your lender can vouch for.
Having a line of credit for your business can help you keep your finances under control, keep your cash flow steady, help cover unexpected expenses, and build strong relationships with lenders. If you’re thinking about getting a line of credit for your small business, we here at 1st Advantage are always ready to help. Our business banking options are flexible and personalized. Our representatives will get to know you and your business personally, making sure that we find the best possible option to help your business thrive. Start your business banking journey with us today! Contact our lending department at
636-970-0440. Member FDIC and Equal Housing Lender