Owning and operating an organization comes with a variety of challenges and having access to a reliable business line of credit can help your business grow and prosper. Ranked among the most flexible borrowing options for small, mid-sized, and large companies, business owners enjoy having the discretion to use the funds however they like helping them to achieve their strategic goals.
What is a Business Line of Credit?
A business line of credit provides organizations with a flexible borrowing option. Unlike lump sum loans, a business line of credit allows companies to use a portion of the line of credit as cash when needed to support expansion endeavors or to cover expenses during off-season lulls. Business owners can utilize this source of funds as needed over the term of the loan without having to reapply each time they want to access the money.
Considered a revolving resource, monthly repayments replenish the business line of credit funds, and any untapped money remains available. Because this flexible borrowing opportunity can be used in a wide variety of ways, industry leaders often apply for a business line of credit so that they can be prepared for planned and unexpected events in the future.
A Business Line of Credit Can Help Your Business Expand
Although some professionals view a business line of credit as a stop-gap measure to deal with revenue slowdowns, others see it as a viable expansion tool. Here are various ways a business line of credit can help your business expand.
1. Hire More Employees
Service industry operations rely on staff members to handle revenue-generating projects. For example, devastating storms cause widespread roof damage that sometimes prompts contractors to hire more carpenters. The contractor can replenish the business line of credit once the property owners or insurance company pays the final repair invoice. Tapping a business line of credit to onboard skilled personnel allows roofing contractors and other businesses to take on more projects and increase profits.
2. Boost Your Employee's Training and Moral
An organization with trusted and loyal employees possesses an asset that cannot be replicated. That’s why it’s essential to invest in valued team members and ensure they can grow and earn promotions from within.
Using the business line of credit to create mentorships, send staff members to conferences, and incentivize education enhances the skills of people driving the organization. This strategy may not look like an expansion on the surface, but the alternative involves higher turnover rates and costly retraining
3. Invest in Your Marketing Strategy
A robust marketing strategy helps accomplish multiple goals. It resonates with existing customers and positions you as a go-to organization. Fresh marketing carves are a place for new products and services while defining the brand. Lastly, utilizing funds from a business line of credit and investing them into billboards, digital ads, and content marketing attracts new clients. Marketing remains a fundamental aspect of promotion and a line of credit can help launch a campaign.
4. Buy Equipment or Software
Business equipment and software are linked to growth and expansion. From lawn care operations that require additional ride-on mowers to accounting firms needing new applications, a business line of credit allows you to get them quickly. The conventional wisdom is that equipment and software support increased efficiency, client bases, and profits. Run the numbers on the revenue uptick against the cost of borrowing to see how a business line of credit can be the perfect tool for your business expansion.
5. Use It as a Safety Net
No matter your industry, all businesses have highs and lows over the past few years. The highs have helped swell profits and the lows have taken some businesses by surprise. That’s why savvy professionals secure a business line of credit, even though they may not have a pressing need to use it at this exact moment in time.
Having available resources in the event of a downturn can serve as a reliable safety net. The funds can be used to buoy payroll, lease obligations, and other necessities until things ramp back up. Without access to funds, such as a business line of credit or deep savings, companies may be forced to lay off workers and lose valued employees.
6. Invest in More Inventory
Too many small businesses fail to maximize their full potential due to inventory shortfalls during peak sales seasons. It’s not uncommon for a retail operation to completely sell out of hot-trending products as the gift-giving holidays approach. While increased sales are certainly beneficial, it may also hold true that money was left on the table due to lack of inventory.
If the brick-and-mortar or online store had a greater stockpile, profits could have truly soared. And, keep in mind, that shoppers are typically out in droves hunting for discounted items after the holidays. Retailers generally get a little extra bump even after marking items down. Using a business line of credit to strategically stockpile inventory allows your business to achieve its full growth potential.
Consolidated Community Credit Union Is The Right Credit Union for Your Business
If you are considering opening a business line of credit to expand your company, CCCU can help your business get the funds it needs to be successful. For more information on our business line of credit please contact us today or visit one of our convenient branch locations.