Lines of Credit Can Be Life Lines For Businesses
Business lines of credit are generally used for the typical ups and downs of cash flow. When we had our computer business, we started on a very small loan from a major bank because the banker believed in our plan. She loaned us money against a Mercedes. We used that loan to buy our first computer from IBM. I will not tell you the model number as that would date me! But it did start a software business that eventually became a major company in our state and competed against IBM, EDS, Southern Bell and other well know national companies. But I get ahead of myself, sorry! My point is that business lines of credit allowed us to build a company that was strong and healthy.
Okay, it’s time to talk seriously about you and your needed business lines of credit. First, if you already have a relationship with a bank and they have not been talking to you about extending you lines of credit, then you should think about changing banks. Remember, you are the client and the bank should be courting you and promoting their services to you.
As with all shopping, you need to know what you want from the lending institution, and understand how the working relationship will change and grow. You need to know why you want a credit line, how you are going to use it and most important (to the banker) is how you will repay it. Don’t forget, this is a long term relationship that you will be building with the bank or lending institution. Business lines of credit can be renewed almost indefinitely if, in fact, you hold up your end of the bargain.
Let the institution sell you on the idea of using their money; but be careful, not to let yourself be sold a bill of goods. Understand that business lines of credit are temporary loans where you control the amounts drawn and when you draw them. For example: this month you may need extra cash, then after you pay it back, you may not need to use a draw for the next few months. The point is, the resources are available immediately, when you need them.
Business lines of credit are essential for the long term growth of any company, and the wise application of the use will give your company the extra strength and stability that will see you through the inevitable down cycles.