If you have a business, you’re probably aware that there are several types of financing available to help meet your needs.  What you may not be aware of is that each type of financing has a best practice that goes along with it.

Whether you are an established business or just starting out, it’s important to know your options:

• Commercial loan:  A commercial loan is the best choice if you're looking to make a large investment in your business, like purchasing equipment, commercial vehicles or upgrades to your facilities.  You may have also used one of these for your start-up costs.  The fixed payments ensure that you can budget every month for the same amount until the loan is paid off.  

• Line of Credit:  A line of credit is a great tool to pay for day-to-day expenses as it's revolving credit, like a credit card.  Good examples of day-to-day expenses to use your Line of Credit for would be paying accounts receivables, purchasing inventory and other reoccurring expenses.  They are also great to have in instances of emergencies.  Because they are revolving credit, it's also important to watch what you’re using it for and to manage your debt appropriately.  If your balance is approaching the limit, it may be wise to transfer that debt to a loan, where you will have a fixed repayment plan.

• Credit card: A credit card can be another great tool to manage your day-to-day expenses, especially if you have a card that gives you the benefits of points when you’re using it.  Credit cards also make it very easy to buy inventory online.  If you are in the habit of carrying any kind of balance though, a credit card isn’t the best option as they will have higher interest rates than a line of credit.  It’s worth noting as well that a lot of businesses will have a line of credit OR a credit card but not usually both.

If you are an established business seeking financing, there are a number of things that your financial institution will want to know about.  This includes seeing your credit report, how long you have been in business and taking a look at your current financial numbers. If you would like to explore financing options, reach out to a member of the CUA team at info@cua.com or 902.492.6500. We would be happy to answer any questions you may have.

Revised Jul. 4, 2021