As a small business owner, especially in certain industries like construction or real estate, you know unexpected financial setbacks can happen at any time. Even the most shrewd business owner has encountered a time when they weren’t sure how to make things work. Having a safety net for these times can give you peace of mind.
A business line of credit could be the emergency plan you have been looking for.
What Is a Small Business Line of Credit?
Similar to a credit card, a line of credit gives you access to funds fast. The difference is that a line of credit can give you cash in hand, instead of being solely for purchases. Lines of credit are open-ended, meaning that you can withdraw the funds when you need them instead of getting a lump sum upfront. Only borrowing how much you need when you need it will save you money on interest in the long run.
How Could a Line of Credit Help My Business?
A line of credit will help your business in times of financial need. Occasionally you will encounter unexpected circumstances that cause you to have a monthly loss, and when this happens your employees still need to be paid. Cash flow management is critical to a small business owner, and it’s often best to get a line of credit before you need one, so it’s already available when something comes up.
A line of credit will also help you build credit for your business. You need to have a good relationship with a bank in order to get loans for your business in the future for things such as a new location. Having an established relationship will make this easier.
Learn More About a Small Business Line of Credit
As with any financial decision, it is a good idea to talk with your CPA about the possible impact on your business. At Foster Financial CPA, we are happy to help our clients with their business accounting needs and questions. For more information on our services and to hear more about how we can help you with your business, contact us today.
Tax Tips for the Self-Employed
Why Every Small Business Needs a Bookkeeper?
Tax Credits That Could Benefit Small Businesses
Why You Should, and Shouldn’t, Apply for a Tax Extension
What Is a Flow-Through Entity?
How the SECURE Act Impacts Small Business Owners