Obtaining financing for a business is one of the most challenging aspects of starting and running a business. As a result, two of the most common reasons why most businesses fail are cash flow and starting off with too little money. For this reason, 43% of businesses apply for additional funding to continue their business, which begs the question, which business funding solutions should you consider?

Have you thought about a small business line of credit? About 85% of businesses seek loans or lines of credit to fund their business, as opposed to credit cards or factoring. A business line of credit is one of the best business funding solutions, especially for people looking for flexibility and control of their money.

So, what’s a business line of credit, and how does it work? In this post, we’ll guide you through everything you need to understand about this type of business funding and how you can use it to your advantage.

What Is a Business Line of Credit?

A business line of credit loan is a type of business financing that allows you to access funds on an as-needed basis.

Essentially, this means that you will not receive a lump sum of money from the lender, and you can only withdraw a little at a time when you need to, for whatever you need to. Given that a small business line of credit is typically a lower amount compared to a term loan, it is most suitable for immediate short-term expenses and not long-term investments.

Business line of credit comes in two different categories, which are revolving and non-revolving.

Revolving business lines of credit replenish after withdrawals are paid, while non-revolving do not replenish. To get a better understanding of this, for a revolving line of credit, suppose you get a maximum of $50,000.

When you withdraw $10,000 to cater to your needs, the account will be left with $40,000. Once you pay back the $10,000, the amount will replenish back to $50,000. However, when it comes to non-revolving loans, the amount will still remain $40,000 even after you pay back the $10,000.

Secured Business Line of Credit

When you take out a secured business line of credit, the lender puts a lien against a business asset, in which case the asset will be used as collateral when you default. What makes this one of the best business funding solutions is that you typically get a higher credit limit and lower interest rates. Lenders can take equipment, inventory, or property as collateral depending on the amount of credit.

Unsecured Business Line of Credit

An unsecured business line of credit, on the other hand, comes with higher interest rates. Since there is no collateral, they tend to be more risks, and it’s a lot more difficult to qualify for most small businesses. To get this kind of loan, you need to have a positive business track record and a strong credit score.

How a Business Line of Credit Works

Business lines of credit vary from three months to 5 years, and the payback schedules usually vary between lenders. Some could ask for monthly or weekly payments, while others will go as far as to ask for daily payments. Once you open a line of credit, the lender will give you access to a reserve with the amount of money requested.

The lender will provide you the monthly invoice that reflects the amount of credit you used, along with all the interest charges. The payments you make will be based on the actual interest you accrue on the funds you use and not the amount in reserve. The interest rates will also vary and will be set by your lender depending on your risk grade, servicing requirements, and whether you put up collateral.

Apart from the interest rates, most lenders also charge an annual fee. It’s imperative that you inquire about all the transaction fees that apply if you’ll be making a significant number of repayments.

When to Get a Business Line of Credit

Navigate no, but a line of credit is one of the best business funding solutions, when is the best time to get one? If you’re currently having cash flow troubles and regularly require money to cover short-term expenses, then it’s a good time to get a business line of credit.

Maybe you’re having trouble with meeting the day-to-day basics of running your business. Maybe you found a great business opportunity that you need to act on immediately. In both cases, getting a line of credit makes sense.

What Does It Take to Qualify?

Just like most other small business loans, qualifying for a business line of credit, it’s not as easy as most people would like it to be. When you have collateral to put up, then it can be a piece of cake. However, it will get harder to qualify the amount you need for your business if you don’t have anything to put up.

When you apply for the loan, you need to have a personal credit score, bank account information, business financial statements, as well as business and personal tax returns. Additionally, the lender may ask you for information that identifies your business, such as the Employer Identification Number.

The Pros of a Line of Credit

All business funding solutions come with pros and cons, and a business line of credit is no exception. One of the most significant benefits of getting this type of business funding is the fact that you only pay interest on the borrowed amount.

The next best thing about it is that you can access the loan even with poor credit. Beyond that, you get fast access to the money you need, and even better, you can use the money for a variety of purposes for your business.

The Cons of a Line of Credit

On the downside, getting this type of business funding is more expensive compared to most other loan options. The interest rates could be extremely high, depending on whether you have collateral or not and how good your credit score is.

Even worse, if you happen to miss a payment, there’s a chance that it will go over your limit, and the lender may impose fines for it. You will also have to deal with numerous fees because it’s not uncommon to come across annual fees, as well as monthly transaction and maintenance fees.

Choosing the Best Business Funding Solutions

If you’re strapped for cash, a business line of credit is one of the best business funding solutions you can go for. This type of business funding will help you maneuver your business without having to worry about cash flow and the day-to-day business operations until you get things back on track.

For more insightful business advice, please check out our blog section. We have authoritative and valuable content on business products and services, personal finance, business finance, and even career and education. Please check us out today!

As a business owner, one of the most important administrative responsibilities you will have is managing payroll. Payroll is essential for scheduling direct deposits, managing employee health insurance, handling taxes, and more.

In other ways, payroll is simply too important to get wrong. That’s why an increasing number of companies in Australia and beyond are looking toward outsourcing for payroll services.

By outsourcing payroll, you are putting this vital task into the hands of professionals, so you don’t have to worry about it. If you are considering outsourcing your payroll, here are six essential reasons to do so.

1. Outsourcing for Payroll Saves Time

One of the most compelling arguments for using different payroll services is that it will save you a lot of time. By doing payroll in-house, you are forcing employees and yourself to spend countless hours on accounting and admin.

This is time that could be better spent growing your business and unlocking the potential of your team. Outsourcing payroll leaves this to the professionals.

2. Outsourcing Avoids Costly Mistakes

When trying to manage payroll in-house, you run the risk of committing the common payroll mistakes that could cost your business dearly. You could miscalculate taxes, or fail to pay an employee the correct amount.

These can lead to serious legal and professional headaches. An outsourced payroll service will give you the peace of mind you deserve.

3. Outsourcing Increases Data Security

In a world where data security compliance is more important than ever, in-house payroll is simply too risky. People in your business could access payroll to tamper with accounts or embezzle money.

In-house payroll software may not be secure, paving the way for identity theft and fraud. An outsourced service will provide all of the airtight security to keep your business safe and compliant by securing business data.

4. Outsourcing Can Save You Money

Outsourcing payroll will not only save you time but also money. The cost of an outsourced payroll service is likely to be significantly less than the costs of paying employees to manage payroll in-house.

The billable hours spend on payroll tasks are likely to dwarf any fees paid to an outsourcing company. If you care about your bottom line, consider outsourcing for payroll.

5. Outsourcing Provides Access to a Range of Services

Payroll is about so much more than simply using direct deposit to pay salaries. When using a professional Australian payroll service, you automatically gain access to a wide range of additional services and resources.

A digital outsourcing service will also manage leave, calculate overtime, generate contracts and invoices, and so much more. Put simply, outsourcing for payroll generally offers excellent value for money.

6. Outsourcing Ensures Top Quality

Finally, it bears repeating that outsourcing payroll guarantees top quality admin with zero effort on your part. A successful business should be run like a well-oiled machine.

Payroll professionals will ensure that no employee misses and payment and that every single penny is allocated to the right place. For professional payroll quality at low prices, outsource today.

Your Guide to Better Business Management

Outsourcing for payroll will allow you to manage your business better. In fact, doing so is just one of many simple and cost-effective ways to improve how your business operates.

For more guides on better business management, we have got you covered. Make sure to consult our Biz section today to access expert guides on better business management in 2020.

To help rebuild your credit score and to help you lead a more responsible financial life, nothing will help more than developing good money habits. Learn to budget, live frugally, and set reminders to make sure you don’t miss any payments. With good habits, you’ll find it easy to meet your financial goals and set new ones. With that in mind, here are some tips for improving your credit score.

Credit: Know Where You Stand

If you’re living with debt that’s gotten out of control, then know that you can turn to the Licensed Insolvency Trustees, also known as bankruptcy trustees, at David Sklar to plan your way to financial freedom and improved credit. But before you can start to see improvement in your credit score, you need to know where you stand.

Checking your credit report gives you the opportunity to see which areas of your financial profile need improvement. You can see if you are regularly making late payments, if you have many missed payments, or if your debt utilization is too high. These factors would lower your credit score but the good news is that you’ll be able to see where you’ve gone wrong and position yourself to make improvements.

Credit Report vs Score

Your credit report goes through the details of your financial standing though it doesn’t always come with your credit score. Your credit score is a very important number that you’re probably trying to improve — it’s by going through your credit report where you’ll start to see how to do that.

One major item to look out for on your credit report is whether or not there are any listed fraudulent accounts: these errors can bring down your credit score and can be very troublesome. Inaccuracies on your credit report must be brought to the attention of the creditor as soon as possible so that they can fix the problem and revise the report.

Rebuild Credit

When you’re struggling with too much debt and perhaps even wondering if bankruptcy is the only way out, then you know it’s time to team up with a bankruptcy trustee. A trustee can guide you through the stressful and overwhelming experience of managing debt that has gotten just too hard to handle.

When you’re struggling with debt, you may think that rebuilding your credit is just a faraway fantasy, but with professional help you can be on the track to rebuilding your credit sooner than you think.

You need to build a consistent payment history to build up your credit as a way to prove to creditors that you can responsibly manage debt. A secured credit card is one of the best ways to do this. Secured credit cards are just like any other credit card except you must provide a security deposit as collateral before using the card. The point of a deposit is to assure creditors that you will pay back the money you borrow.

Of course, you should be careful. The point of the card is to make steady payments and stay within your balance and our personal budget — this is certainly not an excuse to find funds to enable you to live beyond your means. You want to develop good habits and grow a healthy relationship with creditors, rebuilding your credit is how to do that.

Many people do not know that they can actually save good money with their mobile device. Think of your smart phone as an investment, you put a in a lot of money into buying it and now it’s time to reap the dividends.

Apart from making calls, browsing, socializing and other numerous things you currently use your phone for, there are a number of ways you can cut costs and save some money with your mobile device, be it an android – phone, iPhone or a windows based phone.

Here are 7 tips on how to save some cash with your mobile phone

  • Use the budget planner on your mobile phone to plan your daily, weekly or monthly spend. It gives you an idea whether you are going above your income and helps you decide where to cut cost if necessary. Apps like this can help you track your expenses, reduce impulse buying and help you save some cash.

  • You can also download money saving apps like the that allow you to track your credit card spend and ensure you do-not run out of cash before the month ends or to blow over your monthly limit. This app allows you to spend and save on your mobile device. Other apps are available online that can also help you make financial transactions online with your mobile phone and save the cost of having to travel all the way to your bank.

  • Make sure you are on the right plan for your calls. Select the best service provider to get the best plan for your area. If you rarely use your phone to make calls or send texts, a pay as you go option may be cheaper for you. If on the other hand you make a lot of phone calls, then a monthly payment plan may be the better option. Be on the same plan as your friends and family as this could reduce the charges on your talk time.

  • Use your phone to compare prices of items you wish to purchase online so you can decide on the best places to shop to get good prices.

  • Download free games and apps on your mobile device only if you are certain there are no hidden charges. This may mean you have to exercise some control over who has access to your phone, so they do-not unwittingly accumulate charges for you.

  • Avoid calling numbers that place extra charges on your tariff with your mobile phone. It’s cheaper to use a landline to call numbers that begin with 084, 087 and 09

  • Use Wi-Fi whenever you can to browse or download apps on your mobile phone. Use as little of your mobile data no matter how unlimited the plan could cost more than you think as background apps on your mobile could mean that your data is getting exhausted sooner than it should. Ask for a downgrade from your network service provider if you are not using your freebies.