How to Use a Line of Credit to Grow Your Business

A business line of credit can be an essential tool for the small business owner, a tool that can be used to grow your business and keep it from struggling during slow times. When misused, however, this same line of credit can lead to disaster. To optimize your use of this business tool, see where you can make the most improvement without getting in over your head.

Invest in Staffing

When demand for your products and services is so high that your current staffing is struggling to keep up, using funds from your credit line to hire new employees or better train the ones you currently have will help reduce the crunch until sales can catch up. It is crucial not to use your line of credit for ongoing staffing costs because you are employing more staff than your sales can support, and you will struggle to pay back the credit line. However, one-time investments in boosting your team can help buy you time to line up other funding while still taking care of your customers.

Enhance Your Marketing

Boosting your marketing campaigns with an infusion of funds from your lines of credit can help you reach more people and increase your sales online or offline. This method can be beneficial when you are ramping up for the busy season or building anticipation for new offerings because the marketing is likely to more than pay for itself once the news gets out and the sales roll in.

Have a Safety Net

A credit line is often used as a safety net to cover staffing and overhead costs during slump seasons. This safety ensures that you can retain the staff you have already invested in during the slow times and save the costs of rehiring and training staff once it gets busy again.

Secure New Supplies and Equipment

Securing more supplies and equipment for your company, especially during the slow seasons, is expensive. Even though you know that this investment will pay off as soon as you get those items and start working, it is often difficult for smaller businesses to save the capital necessary to cover these expenses. Using your credit line to stock up during slow seasons can ensure that everything is ready to go when the customers arrive and that you have a backstock of essential items instead of a backorder.

Your business lines of credit can be a significant asset to your company during times of growth by helping fund an influx of employees, training, and supplies to keep up with demand. Those lines are also excellent ways to finance new equipment and to keep it available during the slow seasons as a safety net.