Should I use a line of credit for business working capital?

Getting caught in a cash flow crunch is an all-too-common headache for even the most successful small business owners. It’s the reason why 29% of startups fail, the second most common cause behind “no market for the product,” according to research by CB Insights. Even profitable small businesses that don’t have a substantial cash cushion can meet this unfortunate fate.

There are multiple options for averting a cash crisis, but all are definitely not equal. For example, it’s tempting for owners to whip out a business credit card (or even a personal card) for a cash advance or to cover an unexpected expense. Viewed as a very short-term boost, the quick credit card solution comes with earnest plans to pay it off just as quick, in a month or two, max.

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