A business line of credit is your all-star forward, ready to score when opportunities arise or block financial penalties.
What Is a Business Line of Credit?
You're approved for a maximum amount (e.g., $100K), draw only what you need, and pay interest only on the used portion. Unlike term loans, you can reuse the funds as you repay.
5 Strategic Uses for Your LOC
- Smooth Cash Flow Gaps: Bridge gaps between accounts receivable and payable.
- Stock Up on Inventory: Capitalize on bulk purchase opportunities.
- Emergency Repairs: Address unexpected expenses immediately.
- Seasonal Hires: Manage expenses during off-peak periods.
- Jump on Growth Opportunities: Launch new products or services.
5 Deadly LOC Mistakes to Avoid
- Treating it like free cash
- Ignoring the rate type
- Missing payments
- Overlooking fees
- Not revisiting terms