Line of Credit Maintaining With A Line Of Credit
Author: Valerie Mellema
Date posted: 01.07.23

A small business on the East coast made its name by providing property maintenance services, like improvements and repairs, on residential properties at the request of a real estate agent. The business was five years old and things had been going pretty well up to this point. The owner was happy with how well the business was going and excited about the future.

Some Businesses Have an Ebb and Flow

 

One of the things that wasn’t perfect for the business was cash flow. Some months there would be a ton of work and money would easily come in. Other times, there might be little work and it would be harder to ensure bills were paid, employees get checks, and marketing could go out.

 

Based on this issue, the owner decided it could be a good move to seek out financing. When business was dropping, they’d have a safety net for all the business necessities. Then when things picked back up, the extra profits could go to the months when things were slow.

 

How Much Money Is Right?

 

Rather than needing millions of dollars for a new building, the main need here was to have some influx when things were slow. The fluctuations in cash flow could be stressful even if the company was overall profitable. Looking into the records was the best first step to determining how much money would be right for the company’s needs.

 

After digging into the specifics, the owner decided that a $100,000 loan would be more than enough to keep things running smoothly regardless of how a specific month went. So all that was left was deciding on the right form of financing to meet the company’s needs.

Browsing Different Types of Alternative Financing

 

There are lots of financing options for businesses but many of them have requirements that can be stringent. A traditional business loan wasn’t exactly what the owners wanted and having no physical property of their own took other choices out of the running.

 

However, after looking into the details, a business line of credit came up. Looking into the requirements and details made it seem like a pretty good choice. While other options were considered, the line of credit is what the company ended up moving forward with for several reasons.

 

The Benefits of a Business Line of Credit

 

Similar to a credit card, a line of credit gives small businesses access to funds up to a certain credit limit. Instead of taking out the entirety of the money at one time, businesses can withdraw the money as needed. One of the perks is that you pay interest only on the money you’ve used, not what is remaining in the account.

 

Another great thing about a line of credit is that funding is nearly instant at one to two days. In addition, term lengths can vary from six months to three years.

How Things Are Going Now

 

With access to a line of credit, the property maintenance company no longer has to stress about seasons when there is less work available. Dipping into the line is simple and repaying it is just as easy. The business works to pay things back as quickly as possible, which replenishes the funds for the next time they need to be used.

 

The company would love to have so much work they no longer need to use the line of credit, but it’s a great option for now. It lets them do their job at a high quality while making sure the community knows they exist.

About The Author | Valerie Mellema

Valerie has over 16 years of experience as a professional writer of blogs, eBooks, articles and press releases, with a focus on finance and alternative lending. Valerie resides with her family in Texas and is passionate about her horses.

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