With the economic crisis our country has faced during the past few years, there has been increased urging to stop the use of credit. If you can't pay cash, don't buy it. While this may be good advice on the personal side, it usually is not prudent on the business side.
Nowadays, it is hard to be successful in business without utilizing credit. A business needs cash flow in order to meet payroll, pay taxes, and cover scheduled payables such as mortgage, electric, etc. Therefore a certain amount of liquid reserves should be on hand at all times. But what if the cost to expand operations depletes the reserves? You do not want to turn business away and at the same time you don'twant the worry of not having the cash on hand to meet the scheduled payables.
Unlike personal expenses, paying for business expenses when you do not have the cash on hand can be a smart move because it may expand your business and increase your revenue. A business loan can afford the opportunity to pay for capital expenditures while leaving cash reserves available for scheduled payables and incidentals. Business can expand, loans can be repaid, and expenses can be met.
Traditional bank loans can often be difficult for small business owners due to the fixed monthly repayment plan. Monthly revenue often fluctuates greatly for retail and small businesses. A more prudent and less worrisome option might be open a line of credit or take out a loan based upon the business's receivables. The repayment plan is structured upon a percentage of the monthly receivables so that it fluctuates along with the income.
National Business Capital has expert business consultants on hand to discuss your specific situation. Give us a call to learn what options are available for you.
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