The Process Of Maximizing Your Business Credit Line

Having a solid business credit line is a must have these days for business owners, especially for small or new businesses. There are a number of ways that business credit lines can be used. However, there are certain steps you can take to maximizing the worth of your credit line loan.

Getting Started

You may be having a difficult time even getting your business credit line, especially if it is for startup business credit. It can be difficult getting a decent loan or credit line for a new business that has no current credit to speak off, and even if you can get the credit line, you’ll often be more limited in how much you can take and your interest rates will likely be higher.

An easy way around this to maximize a credit line for new business is to use your own personal credit history. Many business credit vendors will allow the business owner to use their own personal history in order to get themselves established (though this also usually means putting up some sort of collateral as well).  It might not be your dream situation, but it could mean the difference between whether or not your business even starts.

Keep It in the Short Term

It is generally considered much wiser to only use your business credit for short-term purchases. To really maximize your credit line, be sure that you are able to pay it off in just a few short months to minimize your interest pay outs. This will also build your business credit very fast, which can help to increase your credit line in the future. Typical short-term credit line uses are purchasing supplies in bulk so as to get a better deal, using your credit line to tide you over during regular slow seasons, and other uses for which credit line spending now means even greater profits in the short-term.

Get the Right Deal

Be sure to consider all your options when you pick up a business line of credit. For starters, pay attention to interest rates. Usually, the interest rates for a business line of credit are smaller than those for other types of loans, but don’t assume they always will be. You don’t want to end up with high interest payments on your credit line, as it will only drain the extra income your credit line has helped you earn.

 
Also, whenever possible, get a business credit line that allows you to make a full repayment at any time without penalties. Paying just those small interest payments versus larger, regular monthly payments is a great way for smaller businesses to become established. And if you’ve used your credit line to make a fast profit, you don’t want to spend 6 months paying it off with interest when you could have just as easily paid the whole thing off in the first month.

Overdraft Protection

One last way to maximize your business credit line is to get an overdraft credit line along with it. An overdraft credit line is essentially money that you only borrow against when your business’s checking account becomes over drawn. It allows you the peace of mind of occasionally spending a few extra dollars on your business account whether you have it or not.

Just be sure that, with both an overdraft credit line as well as a regular business credit line, you do not abuse them. Only make use of the money when needed, and only for a short-term period.