Business Line of Credit 101: A Guide for Entrepreneurs

As the brave battle commander of your own small business, some days you totally own it. Others? An emergency expense pops up or you need to fill in a big order back at the warehouse. In these moments, you most definitely do not own it. With a line of credit business owners know there’s a financial superhero, flying in to save the day. With the right one, you can keep the funds as long as you want, and pay it back when you are ready!

How Does It Work?

A business line of credit is a lot like a giant credit card that you can use at any time. You apply for the credit line, get approved, and are allowed to borrow up to a set amount of money that you can use as needed. Need to make payroll? Use your line of credit. Buying inventory? Use your line of credit. Unexpected problem, and you’re a little short on cash? Use your line of credit.

Bluevine’s business line of credit does all of this and then some. Easy approval and minimal fees are only a couple of reasons this loan is a great financial tool. Keep reading for more.

Smart Ways to Use Your Line of Credit

How you use your business line of credit can greatly influence the overall state of your small business’s finances. Covering payroll during your off-season, ordering a large amount of inventory and easily financing while waiting for client checks may be the right kinds of things to use a line of credit for. It can also help you take advantage of a discount from a supplier or help pay for a new marketing campaign. All of that said, the application should never be used to make a long-term purchase or expense that will not be able to pay itself off. Smarter business buying decisions keep you nimble and ready to stay a step ahead.

Tips for Using a Business Line of Credit Wisely

Be responsible. The biggest thing you can do when you are using your LOC is be responsible. Don’t just take money out and not know what you’re doing with it. Take out what you need. Do you know how you are going to pay it back? How much are you borrowing? Don’t overborrow. Better you borrow what you are comfortable with and pay things back on time. That way, you don’t get yourself in a really big hole and your lender can trust you to pay them back. That will help you in the future either expand your borrowing ability or give you a lower interest rate.

How to Get Started with a Business Line of Credit

Approval for a business line of credit will largely depend on the credit requirements of the lender you’re working with. While Bluevine is a solid choice if you’re looking for ease and a very streamlined process with fast approval times, you’ll have to generally be able to prove that your business has strong cash flow, has been running for the given amount of time, operates within the given industry and personal credit is strong. Moreover, there might be other eligibility standards your business needs to fulfill.

Approved businesses can use the revolving line of credit to draw cash or cover the items on checks the company writes. By drawing on this option, business owners will be ahead of the game and be able to get through those hard times.

By employing a conventional or non-traditional line of credit business owners can tap into and make a huge difference in their business. It gives the company the relaxation of the mind that they have assistance to gain back control when everything around them seems to be falling.