The Most Useful Features of Business Banking Apps
Does your bank's app have features that make your banking processes more efficient? Take a look at our list of the most useful features business banking apps should have today to find out.
Having several different financial resources to choose from is helpful when expanding your business. Flexibility allows your company to adapt to change, especially during periods of uneven cash flow or growth.
A business line of credit is an essential financial tool for many entrepreneurs. However, you need to be sure you can manage it. If a line of credit is helping your business thrive, and you can pay down the balance in a reasonable timeline, then applying for one would be prudent. Yet if you cannot manage your business credit line and interest and fees interfere with cash flow, you may want to reconsider.
Let’s take a look at how to manage a business line of credit.
A business line of credit is a small-business loan that works like a credit card and gives you the flexibility that typical business loans do not.
You can draw a loan amount — for example, $80,000 — and pay interest only on the part of the money you use. They are revolving lines of credit, and this means you can tap into them repeatedly. As long as you do not go over your limit, you can draw and pay back funds as you like.
Business credit lines usually have a higher borrowing amount than a personal line of credit, typically ranging from $5,000 to $150,000.
Many business owners open a business line of credit to access short-term funding. A line of credit makes sense if you need to:
Cyclical businesses frequently depend on unsecured credit lines as a source of working capital to shore up revenue dips during the off-season.
Small business lines of credit are usually extended as an unsecured debt. This means you do not have to put up assets to be used as collateral if you default on the debt.
Companies looking for better ways to manage cash flow may choose an unsecured line of credit because, unlike many small business loans, they are not earmarked for a particular purchase or purpose. Money is usually pulled from the line using a small business credit card, a business checking account, or a mobile app.
You can usually begin using your line of credit right away once you are approved. However, be sure to monitor how much credit you are utilizing and how much you are paying back.
If you only cover the monthly minimum payment, the interest keeps growing and can quickly mushroom out of control. You may find yourself at a point where it is impossible to pay off your outstanding balance.
Business owners often focus on the interest attached to the business line of credit but forget about fees. These extra charges increase the total cost of the loan. Contingent on the kind of credit line you have, you could also face:
On top of those fees, you have your interest rate. This is the percentage you will have to pay for the loan calculated based on your credit score. If your score is excellent, lenders may be more likely to view you as a reliable borrower and will be more at ease lending you a higher dollar amount at a lower rate.
If your score is lower you can expect to pay higher interest. Depending on the lender, interest rates usually range between a few percent to 20% or more. Interest rates are also controlled by the Federal Reserve, which sets the fed funds rate. Borrowing costs rise as the fed funds rate climbs.
Managing your outstanding balance is vital once you are consistently using your credit line. Monitoring your balance will keep your borrowing costs at bay and ensure you have funds available to draw on. Here are tips for managing your business line of credit:
By using your business line of credit for your company’s working capital requirements, your firm will profit by having a strong relationship with your lender and uninterrupted credit. This will allow you to increase your borrowing power to grow your company.
If your credit line balance has reached unmanageable heights or you cannot obtain a credit line or other traditional forms of financing, turn to the new Revenued Business Card. You can qualify for a Revenued Card even if you have subprime credit. That’s because we furnish funding based on your business’s cash flow and banking transactions.
Use it as you would a business line of credit — paying employees, purchasing inventory, covering surprise expenses — and pay only for the portion you use. Plus, the Revenued Card can be used anywhere a credit or debit card can. Track your spending on your user portal or mobile for complete financial transparency.
Learn more about this revolutionary new way to finance your company by calling us at (855) 943-5363 or fill out our online form.
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