Prepare Your Small Business Now for Revolving Lines of Credit

Businesses’ revenues are seldom consistent through the year. If your small business is like most, you have busy seasons where you make much of your year’s profits, followed by slower seasons. Unfortunately, your largest expenses are often not synchronized with your profitable seasons; for example, the best time to do equipment repairs and replacements is when you are least busy. One way to manage your expenses during the slow season is with revolving lines of credit. This type of credit is an approved open loan potential. Clipper Capital establishes a credit limit with you and then you can borrow money within that limit for any purpose. You do not have a set monthly payment, and you can continue borrowing additional funds as you pay down your loan balance. Revolving lines of credit can be lifelines for your business by providing fluctuation in how and when you pay for expenses that arise when revenues are down. However, you must prepare your small business now for this type of loan so that it is an option when you need it.

In order to receive revolving lines of credit, your business must have a good credit score. For many small business owners, this is a problem because their businesses lack credit records completely. For convenience sake, some owners pay business expenses out of their personal accounts.

The first step to building credit for your business is to separate your personal finances from the business finances. You should have separate savings and checking accounts for your business and should obtain a business credit card. A credit card is much easier to obtain than other types of loans, and you can use it regularly to pay business expenses. It is generally best to pay off your business credit card every month in order to save yourself interest that would otherwise accrue. Also, remember that you are trying to establish good credit. Even if you cannot pay off your credit card one month, do not ever miss a payment or pay late.

At some point in your business, you will likely need revolving lines of credit. In order to qualify for the credit you need when you need it, it is best to prepare now. Prepare your business for loans and future growth by treating it like a business. Keep your personal accounts separate and begin to establish credit by using a credit card. Make it a point to pay all business bills early to ensure that the new credit you are establishing is good. The preparation you make now is likely to help your business thrive despite fluctuations that are a part of business life.

Read more on Clipper Commercial Capital’s Unsecured Business Lines Of Credit