A Growing Business Brings New Financial Hurdles
Written by Ken Gaebler
Business owners looking to expand their business can face a completely different set of financial obstacles compared to when they first started up.
While financing a startup can be a difficult challenge for entrepreneurs, getting additional financing as the business continues to grow presents a whole new set of challenges, according to the Wall Street Journal.
The Journal reports that a growing small business may require more financing to expand into a new location, buy inventory or upgrade equipment. Sometimes owners may be able to finance new purchases with the company's own cash reserves, but want some extra capital in the event of unexpected costs. In those situations, a business line of credit becomes a serious option.
If a company is already established, the paper reports it becomes much easier to get a business line of credit from a bank - good news for small business owners looking to expand capacity. Functioning along the lines of credit cards, a line of credit allows companies to keep cash on hand to buy equipment or inventory. Florists, for example, may open a line of credit in January to pay for additional purchases closer to their busy Valentine's season, and pay it off afterwards.
Many companies are also turning to small business credit cards to help them purchase inventory and equipment. The Federal Reserve recently said that it would oppose adding new consumer credit card protections to small business cards because the regulations would serve to prevent more companies from obtaining them.
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