All business owners are concerned with maintaining steady cash flow. A line of credit helps with this because it makes available to you a pre-agreed amount of financing that you can use whenever you need it. Unlike a traditional bank loan, which you receive in one lump sum, you can draw small or large amounts from a line of credit whenever you want for whatever needs you have. Here are some of the purposes for which you can use this method of funding.
If you anticipate a seasonal sales push, a line of credit can help you boost inventory to prepare for it. Alternatively, you can take advantage of deals that wholesalers offer on a limited-time basis during slack seasons. Once you have the inventory you need, you can use the increased sales during peak season to pay back your credit line.
A line of credit allows you to purchase equipment you need to meet the demands of your growing business. Since you are able to draw on your credit line for any amount up to your limit, you can upgrade your equipment so that you remain competitive in your industry.
When funds are low, marketing is the area that often gets cut. However, marketing is crucial to business success. With funds from your line of credit, you can keep your blog updated, increase your social media presence, run an email marketing campaign, and even host seminars and other events.
Invest in Personnel
If your company’s growth is hindered because you don’t have sufficient personnel, a line of credit can help by allowing you to hire more people. You can also use the funds to invest in the employees you already have through mentoring, additional training, and providing incentives and perks.
Have a Safety Net
During slack seasons when cash flow is down, a line of credit helps you to handle expenses such as staff salaries until sales pick up again. With a line of credit, you have the safety net you need so you can make it to the next peak season.
For more advice on lines of credit, contact Topfund Capital.