Has your business outgrown your personal credit card?

With the new Financial Year well and truly underway, many businesses are looking to take a proactive approach to get their finances under control. But with Australia’s rising credit card debt it's no wonder that small business owners often struggle to keep their finances in order. And when you also consider the variable nature of this type of credit, small businesses using personal cards for short-term finance could benefit from switching to a line of credit to better manage their expenses.

What is a line of credit?

A line of credit is a flexible, cost-effective way to manage your company's finances and day-to-day operations. Every business needs access to cash, whether it’s to pay staff, purchase supplies, increase working capital or expand the business. The fact is, even though you may be managing your cash flow smoothly now, you can’t always predict what will happen down the track.

A line of credit ensures funds will be there when you need them, and it’s a financial safety net if you don't. The best bit? Until you decide to draw down, it won’t cost you a cent!

But that’s what my credit card is for!

Businesses will often turn to credit cards for company purchases and even for small cash advances. This is despite the fact that some cards come with yearly fees and hefty rates, especially for cash withdrawals. Australians owe nearly $33 billion on credit cards, despite options for cheaper finance readily available - indicating the credit card trend is based on convenience, rather than price!

So how does it stack up?

Even though they offer similarly practical solutions, a line of credit will usually work out to be the more cost-effective option for a small business operator. As your business grows, so will your line of credit. Unlike a credit card however, as your limit grows your interest rates will often reduce - saving thousands of dollars in fees, interest and other charges over time.

To find out more about a line of credit for your business get in touch with us today or click here to go directly to our partner’s site to see how much your business maybe eligible for.