Lines of Credit
Often, when we think of lines of credit it's impossible to not think of debt and the crushing weight of when it when it gets out of control. However, not all debt is bad debt. Debt can actually provide flexibility and freedom for those who manage it effectively. Small businesses, especially, can benefit from debt financing to help build business credit for potential future financing needs and also help secure better deals with their vendors. Small business owners who choose the right type of debt for their businesses can benefit greatly from establishing and managing their debt to increase their purchase power.
SBA.gov is a great resource for businesses considering debt financing, and offers advice on how to start building business credit:
One type of debt financing that can be useful to a small business are Business Credit Cards. Unlike personal credit cards, business credit cards carry higher balances and may often provide extended repayment terms, providing more flexibility to your business.
Some advantages to using a credit card for your business purchases are:
Here is a Breakdown of Pros and Cons of Business Credit Cards
Strategies for managing Credit Cards
Despite its advantages, business credit cards have the potential of spiraling out of control without proper management. Investopedia offers great strategies on how to effectively manage lines of credit:
Benefits of an SBA Loan
Are you looking for a loan with favorable terms to finance your business? The Small Business Administration (SBA), a U.S. government agency, can help! The SBA’s loan program is designed specifically to assist small-to-medium sized businesses with business expansion and growth. Although the application process for an SBA loan is deemed as lengthy and complex, there are still many benefits in getting this type of loan. The agency collaborates with many lenders to give out loans ranging between $500 to $5.5 million. In lieu of lending directly to business owners, the SBA establishes guidelines for loans created by its partnering leaders, micro-lending institutions, and community development organizations. The agency minimizes risk for lenders by guaranteeing repayment of a certain percentage of the loan, which further makes it easier for lenders to lend to businesses that would not have been able to borrow money otherwise. The funds can be used for most business purposes, including start-up, expansion, working capital, equipment purchases, and inventory or real estate purchases. In comparison to traditional bank loans, SBA loans have lower interest rates, require low monthly payments, and do not penalize you for making prepayments. Some loans include counseling and education to assist you with starting and running your business while others do not even require collateral. An SBA loan could be the financing solution for your business so consider submitting an application today!
Click here for more info: The SBA Helps Small Businesses Get Loans, SBA Loans and Learn the Advantages and Disadvantages of an SBA Loan
Despite Lines of Credit providing businesses with financial flexibility, nothing beats maintaining high liquidity for your business. Liquidity measures the ease with which an individual or company can meet their financial obligations with the liquid assets available to them—the ability to pay off debts as they come due. Since cash is the considered one the most liquid asset, here are some Banking and savings options to help put your money away safely.
Chase Business Complete Banking is a checking account for small business owners! HTH encourages our clients to use checking accounts for deposits from sales, funding payroll, making payments, and keeping track of cash flow.
What is a business savings account?
Some of the top business savings accounts for high-yield savings (June 2021):
Live Oak Business Savings
First Interest Bank Business Money Market Savings
TAB Bank Business Money Market
Axox Business Savings
NBKC Business Money Market
Weighing up different business savings accounts, what to look for?
Click here for more info: Best Business Savings Accounts of June 2021