For many small businesses, finding a way to effectively manage day-to-day operations can be summed up in one word: cash flow. But there are times when cash flow doesn’t cut it. Whether you have to pay an unexpectedly high bill or your income takes a temporary dip, a business line of credit can help. Unlike a loan, a line of credit provides on-demand borrowing at — and even after — you’ve hit your predetermined credit limit.
From cash flow gaps to improvement projects, here are five savvy ways to use a business line of credit to improve operational efficiency.
Managing Cash Flow During Slow Seasons
All small businesses experience periods of high revenues and low revenues. Seasonal small businesses experience this at an even more extreme rate, often requiring additional financing during the slow months. A business line of credit is perfect for when your business has a temporary dip because it acts as a financial safety net only when you need it.
Consider a lawn care business that does most of its operations in the hot summer months and then very little in the winter. With a business line of credit, the owner can finance any “slow” time expenses (say, payroll and garden tool maintenance) without having to worry about procuring and repaying a lump sum loan. Plus, they can avoid unnecessary interest payments during the fast months of the year.
Investing in Equipment Upgrades
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Tools are the heart and soul of a true working business. And while they may help the work to be “all in a day’s work,” replacing or updating them if they ever go down can be a tough challenge. A business line of credit can be the ideal solution. Unlike traditional loans, which need to be taken in their entirety when approved, business lines of credit let you choose exactly how much money to use without racking up excess interest payments.
Consider a bakery that needs a new oven to handle an increase in orders and revenue. With a business line of credit that can put the new purchase on the tab, the baker can keep a steady pace of production. Plus, they can free more of their finances to take care of other needs.
Handling Unexpected Repairs or Emergencies
What’s that age-old saying? The only two things you can count on are death and taxes. Well, unfortunately, we’d like to add something else to that mix: the unexpected. One day, you’re going along with your business and its operations. Next, your fridge suddenly breaks.
In the event of the unforeseen, you can take care of your business immediately. Making any necessary repairs or replacements or providing money for any emergency maintenance means you can avoid any loss in revenue. You don’t have to scramble with how to pay for something that you didn’t see coming. You can make the repairs and continue to operate without any hitches.
Expanding Inventory When Demand Spikes
Sometimes, when you’re trying to get ahead in business, you can’t afford to pass up a good opportunity. If you’re a retailer and you’ve just had your busiest day in history, a few extra items in stock could’ve meant big sales. The problem is, that your inventory needs to be funded (i.e., paid for with working capital).
That’s why a business line of credit is so handy. Short-term credit allows you to acquire stock for sale, and when the sale’s over and you’ve sold out, you’re only left with more cash in the bank.
Covering Payroll and Operational Expenses
Your employees can’t take IOUs to the grocery store, nor can you pay your workers or your light bill. A business line of credit ensures you can easily meet your short-term operational expenses.
If your professional services company doesn’t get paid until clients pay their bills, a short-term business solution like a line of credit can be a great way to stay in the black and pay your employees. Nobody cares when you get paid and where your working capital comes from; as long as the job gets done, your staff remains happy, and the ground doesn’t freeze in winter.
Why a Business Line of Credit with Bluevine?
If you require additional access to cash to help fund your company’s day-to-day operations. With any of the following immediate financing needs, you can use a Bluevine business loan and financing solutions to fund your company’s daily operations. It is, at times, limited as to what a Bluevine business loan can be used for and whether it can be used for working capital to satisfy, with the company’s existing assets, the need to have the minimum available cash necessary to meet the company’s daily cash flow obligations.
Making Smart Use of Credit for Operational Success
Businesses can take advantage of many different business lines of credit solutions to act quickly and affordably. And the business line of credit can help in so many ways. So stop waiting for money, get money into your business today, and keep it competitive for years to come.
