One of my favourite clients approached me 2 years ago seeking assistance for a sizeable unsecured bank overdraft.
An impressive business, they’d grown to near 100 employees, were profitable and were executing on plans to expand their business into additional services to their existing client base and grow revenue substantially.
Given the strength of their business we secured a $1.5M unsecured overdraft with rates and fees better than many bank clients would have for their property secured overdrafts.
But they’ve never used it.
It was never their intention to use it for day to day expenses.
The substantial line of credit has always been there as a backup if something doesn’t go to plan.
If their upward trajectory plateaus or dips for some unforeseen reason the overdraft will support payroll and allows them to be patient if execution doesn’t pan out as expected.
It also allows them to be aggressive and take risks with their execution, knowing they have the reserves to support their strategy and everything does not have to be perfect all of the time.
Because they applied for the unsecured overdraft at a time of strength it will be there to support them with a larger limit, at a lower rate if times change.
If you’ve been in business for more than a few years you’ve no doubt heard a business owner say something like “the bank wanted to throw money at me when I was doing well but didn’t want to know me when I was struggling.”
If you recognise the economy isn’t always great and appreciate markets change, you can appreciate the time to establish your line of credits to support you when markets turn is when you’re at your strongest and not when your situation has become desperate.
If you’re making money now but the Christmas shutdown and future late payers has the potential to hurt you, now is the time to apply.
Plan ahead and you’ll have deeper credit to support you at cheaper rates with lower fees than if you wait until your situation is desperate.
If winter is your cash season the time to apply for a better line of credit is now.
