The rapid spread of COVID-19 has created more than a health crisis. The “stay home” directive that quickly spread across the country is creating a financial emergency for many businesses. And, as we continue to self-isolate, businesses need to find a way to minimize the impact.
Our suggestion? Open a business line of credit.
What is a business line of credit?
A business line of credit is a type of small business loan that works like a credit card. A bank extends a loan that enables business owners to draw against a large sum of money. Like a small business loan, a line of credit provides access to money that can be used to help cover short-term working capital needs. Like a credit card, the business only pays interest on the portion of the money used. For instance, if a company has a $15,000 credit line but only uses $2,000, interest is paid only on the $2,000.
What is the advantage of having a business line of credit?
When it comes to running a small business, having ample cash flow is imperative. Whether you need to increase your inventory in advance of the holiday season, purchase new equipment, or cover unexpected emergencies, having a line of credit provides access to short-term funding whenever it’s needed.
How can I obtain a business line of credit?
Most banks typically require businesses to be established and have a proven payment history for at least two years before they’re willing to offer a credit line. And borrowers will most likely need a credit score of 500 or higher to qualify.
A business line of credit can be a valuable tool. Keeping your small business finances running smoothly can sometimes be a challenge. When it is, a line of credit could be the simple solution you need to meet your goals. If you’re wondering how the loan will affect your business finances or need help making your business more loan-ready, Boris Benic and Associates can provide you with the expert help you need to amplify your success.