How a line of Credit can benefit a business

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A line of credit is an important tool for businesses of all sizes. It provides a source of financing that can be used for a variety of purposes, and offers flexibility and convenience that make it a valuable option for managing cash flow and supporting growth.

One of the key benefits of a business line of credit is that it allows a business to borrow money as needed, up to a certain limit.

This can be especially useful for businesses with irregular cash flow, or those that face unexpected expenses or opportunities.

With a line of credit, a business can borrow the money it needs, when it needs it, and repay it quickly as revenues are generated.

A Line of Credit Can Help with Short Term Funding Needs

An advantage of a line of credit is that it can provide a source of short-term financing.

This is particularly useful for businesses that need to purchase inventory, pay for unexpected expenses, or take advantage of time-sensitive opportunities.

If you have a line of credit setup already, you don’t need to wait for a lender to approve your business loan.  You can access the funds quickly and easily when you need them.

A Line of Credit Can Help With Business Cash Flow

A business line of credit can be used to smooth out cash flow fluctuations, helping a business to avoid running out of money during slow periods or allow for the use of funds while you’re waiting for invoices to be paid.

In addition, a line of credit can be a good option for businesses that may not have the property security required by some traditional lenders. 

Unsecured Overdrafts and Invoice Finance are a good example of lines of credit that don’t require property security.

Credit Can Help With Business Cash Flow

What kinds of Lines of Credit are Available to Business in Australia? 

Overdrafts – A Business Overdraft is a well known and used Line of Credit in Australia. 

Overdrafts are available as a credit facility secured by property and it’s also possible to have an unsecured overdraft – a line of credit not secured by property.  This is an option for business owners who don’t have access to property, or if their property is owned in their spouses name or they’d prefer to keep their property separate from their business credit facilities.

Trade FinanceTrade Finance is a line of credit used for the purchase of material supplies. 

Used to extend supplier terms, purchase inventory, pay for invoices and business costs it helps businesses through their sales cycle and allows them to preserve cash for wages and other costs.

Import Finance – Import Finance is similar to Trade Finance as it helps businesses make important purchases from overseas.

In addition to supplies and materials, has helped a number of businesses use Import Finance to import machinery not available in Australia.  Once the asset arrives and clears customs, Equipment Finance can be used to clear the Import Finance line of credit and the equipment can be put to use.

Invoice Finance – Also known as Debtor Finance or Factoring is a line of credit that allows businesses to claim up to 85% of their invoice values the day they write them to their customers.

Not requiring property security, invoice finance is an excellent way to bring revenue recognition forward in a business.  This benefits cash flow and helps a business through growth phases as well as when cash flow is tight.

Equipment Finance Master Limits – With a revolving limit in place for Equipment Finance you can finance and purchase equipment without the need to apply every time to purchase an asset. 

A Master Limit for Equipment Finance is ideal for a business with substantial asset needs that are ongoing over time. 

Note: Businesses with diverse needs could have one of several of these types of lines of credit.

Final Thoughts

A line of credit is an important tool for businesses of all sizes. It provides flexibility, convenience, and access to short-term financing that can support growth and help manage cash flow. Whether a business needs to purchase inventory, pay for unexpected expenses, or take advantage of time-sensitive opportunities, a business line of credit can be a valuable source of financing and you don’t need property security to win access to their features and benefits.

If you need fast access to a line of credit for your business, can help. Talk to us by sending us a quick enquiry here.

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