5 Ways That A Business Line Of Credit Can Help Your Wholesale Business
When it comes to running your wholesale business it’s important to ensure that you always have the capital on hand to keep operations running smoothly while not disrupting your distribution, but this can be challenging, especially when large unforeseen costs threaten your cash flow. What is the best way to be able to meet the needs and expectations of your customers without creating a detrimental gap in your cash flow?
A business line of credit can be a great tool for wholesale business owners to meet and overcome the day-to-day challenges that come with running a successful business. Read our five ways that your wholesale business can use business lines of credit to effectively improve your customers' experience and discover how Backd’s Business Line of Credit can help your business today!
What is a business line of credit?
A business line of credit is a type of loan offered by financial institutions to businesses. It allows them to draw funds up to a specified limit as needed, repay the borrowed amount, and re-borrow up to the limit as needed, rather than receiving the total amount of the loan in one lump sum. A line of credit is typically used for short-term working capital needs, such as managing cash flow or covering unexpected expenses.
How Can A Business Line Of Credit Help A Wholesale Business?
1. Inventory Financing
When it comes to running a successful wholesale business, you need to have a firm grasp and understanding of inventory management and the financing that is associated with maintaining the stock in relation to demand. A business line of credit can be used to finance the purchase of inventory, allowing a wholesale company to purchase large quantities of goods to meet the demand that the customers have.
Having a business line of credit on hand will allow you to pre-emptively make purchases needed and you can use the return on investment from the stocked goods to replenish the credit used. This ensures that you have a revolving credit to replenish goods, resulting in a steadier cash flow constantly.
2. Working Capital Management
The great thing about a business line of credit is that it can really be used for anything that a wholesale company may need. One of the items that a business line of credit can have an impact on is working capital management, you can use this financial tool to cover daily operation expenses such as rent, salaries, and utilities, while you divert the rest of your incoming capital towards expenses that help you develop or diversify your business.
3. Equipment Purchases
Equipment purchasing will always be an important factor in running a successful business. Over time, equipment slows up and even breaks down, creating a need for buying expensive replacements or costly maintenance.
Savvy business owners can utilize a business line of credit to purchase new equipment, such as machinery or vehicles, which can help improve the efficiency of a wholesale business leading to increased production and profits.
4. Expansion
When your business succeeds, it’s a reasonable next step to consider expanding in order to cater to a wider market and bring in additional clients. But expansion isn’t cheap, you’ll need to have a lot of capital on hand in order to successfully support your business through the costs associated with growing your enterprise.
A business line of credit can provide the funding needed to expand a wholesale company into new markets or to open additional locations. If you utilize a revolving business line of credit then you can ensure that you always have funds available in order to better support your business during an expansion.
5. Seasonal fluctuations
For many industries, the changing of seasons can bring fluctuations in demand and cash flow. Wholesale businesses can find themselves within the groups of businesses that see a steep drop in revenue during certain months, usually followed by a massive ramp-up in sales in later months. But how can you purchase the inventory needed to stock for an increase in sales if you are coming out of a slower slump?
A business line of credit can help a wholesale company manage seasonal fluctuations in demand by providing access to additional funds when business is slow and allowing the company to repay the loan when the business picks up again.
Business Line of Credit Options
Lender | Amount | Terms | Requirements |
Backd | $50K - $750K | 6 or 12 months | Minimum of 2 years in business, minimum monthly revenue of $50k, business bank account and a minimum credit score of 625. |
PNC Bank | $100K (max.) | Monthly repayments with no set terms | Minimum of 3 years in business, minimum annual revenue of $100K, a minimum credit score of 720, and must have a personal guarantee. |
Bluevine | $250K (max.) | 6 - 12 months | Minimum time of 6 months in business, minimum annual revenue of $120K, and a minimum credit score of 625. |
Kabbage | $2K - $250K | 6, 12, or 18 months | Minimum time of 1 year in business, minimum monthly revenue of $3K, and a minimum credit score of 640 |
Fundbox | $150K (max.) | 12 or 24 weeks | Minimum time of 6 months in business, minimum annual revenue of $100K, and a minimum credit score of 600. |
With a max loan amount of $750K, Backd offers the highest option for a business line of credit with favorable terms, competitive rates, and a revolving line of credit that reloads as you pay the balance.
Benefits of Backd Line of Credit
When it comes to finding a financial solution to help your wholesale business grow, Backd is here to help.
Backd’s Business Line of Credit is one of the best on the market with competitive rates and terms that actually allow your business to grow. Backd offers business lines of credit of $50K up to $750K with terms of 6 or 12 months. If you’re considering taking out a business line of credit then apply with Backd today. Our application only takes 3 minutes to complete with funding arriving in your account in just 24 hours. Don’t wait to get the funding that your business needs to grow, take the first step and apply with Backd today.
