The moment that you look at the bank statement of your startup, you realize just how dynamic and unpredictable cash flow is. At one time the cash flow is steady while the other time it changes its balance. The problem is that these fluctuations make it impossible for you to plan for the future. Don’t worry. How do you manage your business’ cash flow? Almost every entrepreneur in Colorado is faced with this dilemma. Do you know what these people do? They secure a business line of credit. If you want to discover how this kind of financing tool can help your startup company, then you should continue reading.
Defining the business line of credit
Chances are that until now, you haven’t heard about the business line of credit, otherwise, you’d have secured this type of financing already. A line of credit is basically an arrangement a bank and a customer. Based on this agreement, you can borrow money. You get your hands on the capital that you need for your company activities. Attention needs to be paid to the fact that it’s not the same thing as a business loan. The interest rate is variable, not to mention that the term of the line can be ten years. Sure, there are other distinctions, which is why you need to talk to a lender.
How to use a business line of credit
You want to be on top of your finances, right? If the answer is yes, secure a business line of credit and manage that cash flow. Your startup company isn’t taking in enough money and it’s urgent that you pay your bills. The great thing about this type of financing is that you borrow when it’s convenient for you and you take only as much money as you need. Not more, not less. Getting money into your enterprise fast is what you need to do right now. When you have a cash flow issue, you should do everything in your power to solve it. If you don’t opt for a financing solution, you’ll not have any money available when the situation requires.
Which business line of credit is best for you?
You’ve thought things through and you’ve decided that a financing solution is what your Colorado company needs. There are two main options for you: secured and unsecured lines. Let’s find out a little more about them.
- Secured business lines of credit – When a business line of credit is secured, the lendee is required to provide personal or corporate collateral. You have to put something of value as guarantee. This option is worth considering because it has a maximum credit limit.
- Unsecured business lines of credit - When a business line of credit is unsecured, the applicant can guarantee the loan with only the personal credit history. This option provides a kind of protection, in the sense that there’s no specific collateral.
It’s up to you to decide what financing solution is best. Just make sure to consider the advantages and disadvantages.
