If you're a small business owner, you know that capital is key to success. That's why it's important to make the most of your line of credit. Here are a few tips to help you do just that:
- Make sure you know what your limit is and stick to it.
- Avoid late payments. This will damage your credit score and could lead to higher interest rates down the road. NSF or “overdraft” are some of the bank account notifications that can be referred to as negative events. You should try your best avoid them because they could have an impact on what kind financing options you may be eligible for in future
- Keep your account up to date. The flexibility of business credit lines is unparalleled. You can even choose not to withdraw anything for extended periods, but it's important that you keep your account up-to date so the lender doesn't have any reason why they might cut off access! If you haven’t been updating your account, your lending partner will likely need to reassess your business before extending a new credit line mainly because the financing you’re getting is tied to your cash flow.
- Keep an eye out for liens. Liens provide a way for lenders to secure their investments by tying them into your assets. They’re also used as security interests, which mean that they can be filed with the lien and make it public so you don't have any arguments about who owns what when someone defaults on payment or performance of an obligation. You should check with a lender and ask at what point they’ll file a lien, and if they will provide funding once they’ve filed, or if they will require confirmation from the Secretary of State. Each lien filing must be filed in the borrower’s state of incorporation and every state’s Secretary of State is set up differently, which can impact the time it takes to process the lien filing.
By following these tips, you'll be on your way to making the most of your line of credit and growing your small business. If you're looking for more advice or want to explore financing options available to small businesses, contact National Legacy Capital Group. We're here to help your business succeed!
