Seizing the moment can be crucial to the success of a business. However, that may mean you need capital (money) to make big changes happen, such as renovating your storefront or investing in marketing.
A commercial line of credit can be of great help during these growth periods, and using it wisely can make all the difference.
What is a Commercial Line of Credit?
As discussed in a previous blog post, “What is an Operating Line of Credit?” a line of credit works by giving you a set amount of funds in a credit line to use for business purposes. A commercial line of credit is specific to businesses and can help with the daily operations and maintenance of your business.
There may be times during the course of your business’s life where accounts payable (your expenses) do not align with accounts receivable (income). Having credit on hand may be of use to continue operating in your previous capacity while you work towards making up the difference. A line of credit can fill a gap you either anticipate or one that comes up unexpectedly in your business.
How a Line of Credit Can Help Your Business
While credit is sometimes a financial tool business owners shy away from, you might be able to use it to your benefit such as when:
- Seasonality impacts your business – Some businesses rely on either warm or cold weather to drive business, such as golf courses or other outdoor recreational facilities; landscaping companies; and construction companies. When this is the case and you still need to make ends meet in the off season, a line of credit may be beneficial.
- An emergency arises – It’s a fact of life that emergencies happen at the most inconvenient time. If your building suddenly needs repairs or you need marketing materials redone, but you don’t have the funds necessary to pay for these sudden expenses, a commercial line of credit can help you cover the costs.
- An opportunity comes up that you must seize right away – If you anticipate a building purchase or find other assets that would greatly impact your business, you may not have the cash on hand to cover the costs. However, a line of credit may be a useful tool to help fill the gap or cover the entire amount of money you need to make big changes in your business.
- Late invoices or payments impact your ability to meet expense deadlines – Life can get in the way for your customers or yourself, and sometimes that means bills are paid late. While you as a business owner cannot control how quickly your customers fulfill their invoices, you can control whether or not yours are paid on time. If there is a possibility you may have to pay late or are unable to pay on time, a line of credit may be a good temporary solution until you are back in the black.
A line of credit, when used correctly, can provide numerous benefits and access to money when you need it. Grow your business through responsible borrowing and watch it take off!
Contact Bank of Old Monroe
If you are interested in getting a commercial line of credit for your business, Bank of Old Monroe is here to help. Contact us to learn more!
