I have to give a shout-out to the small businesses doing all they can to stay afloat. The creative ways you are providing goods and services continues to amaze me. As new small business financial assistance programs have been made available or updated, we’ve been tracking and discussing them in our Small Business Resource Library. But to tap into all possible resources, let’s talk about a more traditional one: the small business line of credit.
A line of credit is both similar to and different from a loan. Both a loan and a line of credit let you leverage existing assets in exchange for cash, which can be spent immediately on operational needs.
However, a business line of credit is not a single, defined amount of money. Like a personal credit card, it can be replenished up to the credit limit over and over again. As long as you continue to make the minimum payment on time, your business has access to the available amount of credit.
Even before the COVID -19 crisis, a line of credit was a good thing for a business to have for managing cash flow, buying inventory, and paying for a surprise expense.
Most banks typically require that the business
Building a Strong Profile
Demonstrating your credit-worthiness is the key to building a strong credit profile, which is important no matter what kind of small business financing you are seeking. Keys to building a strong profile is to:
In response to the COVID-19 crisis, banks and lenders may be adjusting their policies to help small business owners ride things out. If you already have a line of credit, it’s worth checking to see if they will:
The bottom line: Would a lender consider your business “loan-ready?” Do you know how a loan will affect your finances? If you need help answering those questions, let us know. Contact us today for a free consultation.
Additional sources
Building Business Credit in the Wake of COVID-19
Impact Of COVID-19 On Lines Of Credit