Business structures and forming your business
Understand the differences between a Sole Proprietorship, Limited Partnership, Limited Liability Partnership, Limited Liability Company, S Corporation and Corporation.
Cash flow is an ongoing concern of most every business owner, whether they are just in the startup phase or have been in business for years. A business line of credit can fill those gaps when you are experiencing a cash crunch or get hit with unexpected expenses.
Benefits of Having a Line of Credit
One of the biggest advantages of a line of credit is the fact that you have control over your business. A business line of credit saves you from retrieving money from your personal savings account, using credit cards as a means of funds, or approaching family and friends if you have a sudden need for cash.
Unsecured lines of credit are much like a cash advance but at a fraction of the cost. They offer funds that are quickly available when you have unexpected expenses.
Unlike a cash advance on a credit card, they have no cash advance fee and offer standard payment rates and APRs. With a cash advance, these amounts can often be hard to figure out.
If your business is new, a business line of credit is an excellent way to build a positive credit history.
Obtaining a Line of Credit
Like any credit or loan, most of the lending decision is based on how much of a risk you are. If you have a high personal credit score and your business is profitable, you are likely to qualify. You might also receive a better rate and a larger amount.
Most likely you may have to secure the loan personally, especially if you are a startup with a sparse track record. Here are four things you should prepare for when applying for a business line of credit:
Using a Line of Credit Effectively
Once you get the line of credit for your business, use common sense to make the most of it. Use your line of credit efficiently with the help of these three tips.
A line of credit is an asset to every business. Take the necessary steps to secure one and then use it sensibly. It not only provides cash to meet seasonal demands and delays in collecting receivables, but also provides you with peace of mind.
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