Avoid Misusing Your Business Line of Credit

Business Line of Credit

If you have a business line of credit, it is important that you understand the right and wrong times to use it. Certainly, there are circumstances in which it is fine to use a credit line. Typically, this includes things that involve your average monthly cash flow, or for certain types of emergencies. We’ll be discussing some of the criteria you should follow to guide you as to when and when not to use a business line of credit, in this article.

Never use a business line of credit for a long-term expense. If you are having difficulty getting approved for new funding to expand your business, buy new equipment, etc., you might be tempted to use a business line of credit. Some people will even go so far as to use a home equity credit line. This is not a proper use for this tool. The funds being borrowed will not be secured, and you will pay a much higher rate of interest. You will also lose access to the credit line in cases of emergency while you repay the loan. You should seek other options instead.

Don’t use your business line of credit to offset bills from customers that are consistently late or sporadic in payments. You should first consider if those customers are a good value to you or not. However, if you decide to continue working with them, you will be safer to go with a factoring company. These companies will buy your invoices in exchange for cash. Of course, there is a small fee involved.

For more information, go to Business Line of Credit at http://www.unsecuredbizloan.com/business-line-of-credit/

Avoid Misusing Your Business Line of Credit was last modified: October 25th, 2011 by Amit Kraidman
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