The Best Assets for Small Businesses Are Unsecured Lines of Credit
If you’re trying to figure out your company’s cash flow and financing needs, you need to know how powerful unsecured lines of credit can be for your small business. You also need to know how to select credit lines that will work to your advantage when you’re ready to make purchases. Last but not least, it’s important to have a plan for using multiple credit lines to organize your finances.
Let’s talk about selecting credit lines that work for your business. When it comes to your unsecured credit, you need to work with a provider who will be able to give you the buying power you want while also providing you with the interest rates you need. All the purchasing power in the world won’t matter if your credit line costs too much to use. Investigate your grace periods, annual interest rates, and incentive rates. Many credit lines will offer you incentives like longer grace periods on major purchases. Compare all your options, and see what works for your business.
You also need to pick lines you’ll be able to use for multiple purposes. A flexible draw line that can be used for cash is a great way to manage your cash flow if you’re looking to cover supply line expenses or equipment, but more traditional business credit cards might be a better choice if what you want is an opportunity to consolidate your incidental purchases or day to day expenses for better tracking and ease of payment. Consider what the line is going to be used for, and don’t be afraid to open multiple unsecured lines of credit for different purposes instead of relying on a single large line to catch everything.
Multiple credit lines allow you to trade off interest for purchasing power or other incentives, and they also allow you to better organize your cash flow, dedicating certain lines to covering daily operating expenses you didn’t anticipate and another to consolidating, say, vendor payments. Using credit lines as your first line to pay suppliers can extend your window to pay for goods and services by using the credit line’s grace period to extend your own outgoing cash. It requires careful planning and balance, but it can effectively help your business reach farther and do more.
Consider all these points as you select your credit lines, and then go looking for the lenders who offer the options that fit your needs. That way, you can be sure to build a credit portfolio that really serves your company’s needs with your unsecured lines of credit.