Using a Business Line of Credit

Business Line of Credit

If you have a small business, especially a service business, you’ll want to get a business line of credit to deal with your day-to-day expenses. We’ll be discussing the best way for using a business line of credit in today’s discussion.

First of all, you’ll want to make sure that your business line of credit gives you a 30-day grace period. This is important to avoid paying unnecessary interest. If you have the right line of credit, you’ll want it to cover an amount of time equal to about three months’ worth of expenses. Much less than that will run you the risk of not having enough credit on hand for emergencies. Much more than that will run you the risk of becoming complacent or unrealistic about your use of credit over earnings.

The way I recommend you use your business line of credit is as follows: Run all your regular business expenses through it each month, and keep an account of pending incoming and outgoing payments from customers. Although avoiding interest is important, you also want to avoid disturbances to your business.

Ideally, you will pay off the amount you have borrowed each month from the incoming receipts from customers, and pay off the balance in full each month. This can be particularly helpful if you are a service company that has a great deal of “net 30” contracts.

Of course, it is fine if some of these come in late and you keep that portion of the balance. This will work so long as the extra fee to your customers outweighs the fee on your credit line.

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

Using a Business Line of Credit was last modified: November 8th, 2011 by Amit Kraidman
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2 Responses to Using a Business Line of Credit

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