There’s a reason they call it a line of credit: It can be the rope and flotation device your business needs to stay afloat.
It can be, in other words, a lifeline. When your business is struggling a bit to address its liquidity problems or just make it through the times when cash is tight and sales are a little lacking, a line of credit can ultimately make the difference.
At Direct Capital, lines of credit are commonly discussed for one reason: There’s not many of them left.
Lines of credit are becoming increasingly scarce because bank lending is shutting down and what banks are willing to offer in terms of products has taken a plunge along with it. With the economy climbing up and down the ladder seemingly on a whim, that’s not likely to turn around any time soon.
So the line of credit is slowly going the way of the dinosaur. What’s out there for alternatives, then?
- Start with an alternative lender. Direct Capital is just one example of lenders out there who don’t deal in lines of credit, but offer a suite of other products that can get you money without requiring you to pony up collateral. They can be a winning solution.
- Straight up leases and loans are probably fairly familiar to you, but they remain solid choices. A capital lease, for example, may allow you to purchase a piece of equipment after the lease term has run its course for just a dollar.
- You could also consider a working capital loan.* It’s paid back in the same way a normal loan is, but its uses are pretty close to unlimited. That versatility matters a lot given the varied needs of your business and how hard it can be to get a traditional loan or line of credit to cover what you need.
Ultimately, there is no one right answer for your business, but it’s good to be cognizant of what’s out there with lines of credits becoming scarce.
What kind of financing or financial help are you most likely to seek?
Photo credit to iStock
*Working capital not available in the following states: AK, DE, ND, VT