To cut to the chase, you’re here because you’re in the flooring industry. And let’s be honest, you’ve probably looked over a bunch of different loan options to figure out which ones fit your needs, and maybe even which ones you should steer clear from.
Whatever the case is, there are quite a few loan options available nowadays. And while having more options is always nice, it can also be pretty overwhelming; or maybe even just a little time consuming to research all of the information out there. You’ll either already have seen things like startup loans, SBAs, personal loans, business lines of credit, and so on. Needless to say, it can be exhausting looking over all of the choices for your flooring business.
While I can assume most of you reading this know what a line of credit entails, I’ll give a brief summary of what it is. So business lines of credit (or revolving lines of credit) work relatively similar credit cards; with interest rates applied to every bit of money owed that has to be paid back.
However, there’s an objective upper limit to the amount of money available in a business line of credit. And to emphasize the differences, you only pay interest for money used in the line of credit rather than the entire thing. So if you don’t take money out of the line of credit, then you won’t pay any debt back. And even if you do, you’ll only have to pay off whatever is taken out; while also being able to use the rest of the remaining credit if need be.
To decide whether you’re qualified, banks and other financial institutions will look at the Three Cs: Credit, Cash Flow, and Collateral. And as long as you have any one of them, they’ll help you out with your application.
However, as with all things, there are pros and cons to taking out a business line of credit.
Should you take out a line of credit for your flooring business?
Pros of a Business Line of Credit for your flooring business
- Money is readily available at the exact moment you need it if you have a line of credit.
- You’re not paying off any debt for having the line of credit if you haven’t taken money out.
- It’s good to have for those “just in case” situations or during slower business seasons.
- As long as you pay off the money borrowed each time (plus interest), it’ll do wonder for your credit.
- With good credit, it can also help you get other loans at better rates.
Cons of a Business Line of Credit for your flooring business
- If you’re a new business, it might be a bit difficult to qualify. Banks and other financial institutions look at monthly/annual revenue, time in business, credit, and tax returns.
- Yo even get a business line of credit, you’ll have to pay a few initial fees. So even though the interest rate is lower than a credit card, the fees may not justify having the line of credit.
- At the end of the day, a business line of credit is more debt. If you can pay everything off in time, great, but if you end up struggling to pay borrowed money back in time, it’ll just be more debt that could hurt you.
- It’s pretty risky to get a business line of credit unless you’re absolutely sure you make enough to pay it back quickly. No matter what, you’re obligated to pay all the money back with interest.
- They’re pretty flexible, but because of their limits, the amount you can take out is a bit smaller than what you’d want for a bigger company.
So would a Business Line of Credit be good for a Flooring Business?
To put it simply, yes. While bigger companies may not benefit as much, if you’re just starting out, then a line of credit is great to have in a pinch or during the offseason of business. Even if you’re applying for other loans, it’s still not a bad idea to get a business line of credit for those “just in case” situations.
Finance Factory can help you get the business line of credit you need for your flooring business
Since you’re looking into a business line of credit for your flooring business, look into Business Express Loans, Securities Based Financing, and Business Credit and Educational Systems.
Finance Factory has a team of highly trained professionals who guide and educate clients so they can make the best and most informed decisions possible when looking at loans. They help you every step of the way and give you all of the information for your application. Their specialty is making and building relationships between small business owners and vetted lenders while offering great rates and affordable terms for everyone.
Interested in finding funding for your business? Finance Factory would love to help! If you’re looking to fund your business within the next 30 to 90 days for $25,000 to $500,00 and have a credit score of 660 or better, let’s chat! Get pre-qualified right now with our quick-step pre-qualification form! And don’t worry, this will not result in a hard credit inquiry of sensitive information. We just want to learn more about you and your business. Click below to get started!