(855) 558-8433 info@hedgecommcap.com

There is an almost constant need for cash in small business environments. On some level, this is because there are always new expenses: inventory to be ordered, payroll to maintain, bills to pay, and more.

At a certain point, having a sustainable business means that you must make enough money to reliably cover these expenses. After all, you do not want to be perpetually strapped for cash, both from a personal and a financial perspective. But the fact is, sometimes you need a little extra funding, and lines of credit can be enormously helpful in making up the difference.

Read on to learn about some of the benefits of a line of credit for a small business.

1. Use It When You Need It

A line of credit simply offers a certain amount of cash that you can consistently draw upon, but are not required to. In other words, it is there when you need it.

If you have had a successful few months, and are making steady money, you may choose to avoid drawing on a credit line. Alternatively, if you need quick cash — to cover payroll, order more supplies, or something else — a line of credit gives you quick access. In many cases, lines of credit have relatively reasonable rates, meaning repayment is quite possible.

2. Build Your Fiscal Profile

Your business has a professional credit score, just as you have a personal credit score. A better business credit score may allow more easy access to loans, better lease terms, and more.

Lines of credit can be very useful in allowing you to build up your business credit. Regular use and steady repayment will tend to demonstrate increased creditworthiness, helping to improve your credit score.

3. Employ as One of Several Tools

Diversification is often a good strategy for a small business, ensuring that if one revenue source dries up, you have others to fall back on.

A similar strategy can sometimes be useful with loans. Having multiple potential sources of funding will ensure you have enough to cover what you need, and will not go under if you lose one of them. A line of credit can be a helpful financial tool in this respect.

Ultimately, lines of credit can be quite helpful for small businesses. They tend to be fairly accessible and offer numerous benefits to help your business thrive and grow more sustainably.