Small Business Line of Credit Can Provide Peace of Mind

Written By: John Tejada Published On: 8/04/18

Business lines of credit are excellent with assisting with the recurrent nature of most businesses. Millions of small business owners understand that they can not always make ends meet on their own. In fact, the strongest businessmen/women understand that it takes money to make money and that receiving funds from outside sources just makes good business sense. One commonly used option to obtain capital is by securing a business line of credit. A business line of credit can help you get through the hard times and provide the peace of mind most small business owners are seeking.

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What is a Business Line of Credit?

A business line of credit is defined as an agreement providing credit up to a certain amount. The client can withdraw funds at any time, as long as he or she does not exceed the maximum allotted credit amount found in their agreement.

The advantage of a AMP Advance business line of credit over a regular business loan is that the interest is only based on what you use, and the business owner can withdraw funds at their discretion. Meaning, you do not have to take the entire amount that you are approved for all at once. You take what you need and solely payback on what you take, unlike other products in which you have to pay daily on funds that you haven’t used. This product revolves allowing you to withdraw over and over as long as you are paying back sufficiently.

A business line of credit is a type of financing product that is granted to help businesses finance many types of business expenses. In most cases, a line of credit is utilized to assist a company with short-term operating needs. This includes, and is not limit to, basic day-to-day operational expenses, payroll, material costs, increasing working capital or simply refilling your inventory. Most businesses — at one time or another — have cash flow problems. Cash flow issues can stem from a variety of reasons ranging from being on a set net 60 or 90, seasonal conditions affecting sales, or even natural disasters that may leave you without work. The fact is, even though sales may be the best they have ever been, there is never a guarantee that they are going to remain stable forever. It’s possible that someday you’ll be stuck trying to pay for operations or even business related bills— without enough capital in your bank account to cover the expense.

As a small business owner you already know that in order for operations to run smoothly without interruptions, capital must be on hand. Even though we always recommend to properly save so that funds are on hand during a rainy day, the next best suggestion is to receive a business line of credit. Applying while you are flushed with cash puts you in the best position with lenders—after all, we all know that banks are more eager to loan you money when you don’t need it, rather than when you desperately do. In situations like these, all businesses  can benefit from a business line of credit. Responsible business owners generally are ready for rainy days occur, it is not too late to guarantee a prosperous future for your company.

What Should Business Lines of Credit Be Used For? 

A business line of credit is a product used for small business owner’s short-term working capital needs, such as payroll, material purchases, or refilling inventory. Lines of credit come in handy to even out the ups and downs that you may experience in sales from day to day. Terms lengths are set annually with an interest rate based on the prime rate plus one to three percent. Payments are comprised of a percentage going to repaying the principal amount as well as a percentage for the interest on this amount. But the largest benefit is small business owners only pay on the amount you borrowed. 

What Should Business Lines of Credit Be Used For? 

It is suggested to make sure to reach a zero balance 1-3 times yearly to show proper financial responsibility. Don’t withdraw more than you can repay in 1 week. Using a business line of credit correctly and paying back what you’ve used weekly you are truly utilizing the line correctly and securing yourself the cheapest cost for capital on the market. Business lines of credit can range from $5,000 to as high as $250,000 (at AMP Advance), depending on your what your business qualifies for. 

Let’s just say you decided to break off on your own and start a new business, this new business to succeed needs marketing in order to be seen and solidify yourself as a brand. Because of the marketing expense you know are unable to make payroll and we all know that making payroll is vital to stay afloat and of course, it provides security for your employees to be able to provide financial security to their families.

Life is unpredictable, we know that. The peace of mind that business lines of credit provide helps weather the storm and guarantee that all expenses will be paid. While every business should have a cash cushion available for times like these, sometimes the crisis lasts longer than the money does. Times like these are exactly when you should draw on your business line of credit. 

If a small business’ sales are contingent upon sales of inventory then it is vital that all current inventory needs are met and that all future inventory needs are accounted for. As the owner of a business, your success is measured by consistently being able to give your customers what they want exactly when they want it. Meeting that demand keeps you in business; going above and beyond helps you grow. 

Owners of restaurants as well as small business owners whom have retail companies tend to benefit the greatest from business lines of credit. These companies are inventory based and while the individual responsible may be good at efficiently ordering, salesmen are always trying to push deals today instead of tomorrow. If it makes good business sense small business owners can benefit from splurging with the credit cushion providing room for innovation. Any individual having to deal with sales reps from companies in which their products are sold have seen every pitch known to man. As a business owner with extra cushion in the form of credit you can now take your business to the next step, increase sales, and continue to dream big.  Once you sell that inventory and make the profit, you can repay the business line of credit, and continue to relax and take full advantage of your new found peace of mind.

AMP Advance is a Miami based industry leading direct funding source

AMP Advance is a Miami based industry leading direct funding source out of Coconut Grove, Florida. We help those who are in need of small business financing by providing web based financing options & funding solutions. Our solutions assist small business owners find matching opportunities while assisting small business owners improve their overall financial situations. AMP Advance provides small business loans, business lines of credit, accounts receivable financing, equipment financing, unsecured business loans, and revenue based loans to millions of small business owners nationwide.

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