Periods of economic turbulence and uncertainty like those caused by the COVID-19 pandemic have the potential to significantly affect small businesses. Unfortunately, many businesses have learned in 2020 that interrupted sales can create financial disaster for a business that was previously stable or even thriving. One option in the proverbial “toolkit” for small business owners to explore is Unsecured Lines of Credit (ULOC).
Used wisely, Unsecured Lines of Credit have the potential to help your small business navigate uncertain financial waters and cover unforeseen expenses, so your company can continue to thrive.
How Unsecured Lines of Credit can carry your small business through
A single unplanned expense or period of cash flow challenges could mean the difference between business as usual or bankruptcy for many small businesses. With Unsecured Lines of Credit, business owners can tap into a pool of cash without putting up collateral to solve immediate financial needs. It’s possible that a line of credit can be a lifeline for your small business or franchise.
Here are a few major reasons a business owner might need to utilize ULOC:
- Cash flow problems: Periods of economic turbulence can throw a small business’s cash flow out of sorts, with clients paying invoices later than usual or sales dipping unseasonably. If a payment is on the horizon but you need cash to pay your employees or a crucial bill, having a line of credit can help you bridge that funding gap.
- Emergency repairs: Store or equipment-related repair or replacement can be challenging enough on their own, let alone during a crisis and economic uncertainty. If your business can’t front the cost of a repair, funds from ULOC can cover the cost or allow you to invest in new equipment so you can get back to business as soon as possible.
- Investments with quick returns: If a business opportunity presents itself but you don’t have the funds to make the leap, you could lose out on the ability to grow or evolve your company. This might be critical as your business navigates market changes. For example, a café that only conducted dine-in business might have experienced losses during COVID-19 shutdowns if they couldn’t afford to invest in take-out or delivery methods. Tapping into ULOC to invest in an opportunity that will provide returns quickly may help your business stay relevant and lucrative.
Use ULOC wisely
Of course, there are risks associated with ULOC. As with all debt, the choice to use credit should be carefully weighed against your business’s ability to pay it back later. You should never go into debt for your small business without a clear repayment plan in place.
Staying on top of your debts and using credit wisely can unlock a host of benefits for your business and help you navigate uncertainty with less stress. Tenet Financial Group helps small business owners obtain ULOC for their startup or franchise, in addition to 401(k) Rollover funding, SBA Loans, Term Loans and more. To set up a call with a funding consultant, send us an email today.