Seasoning money you get from a business line of credit

Seasoning money means setting aside some of the cash you draw off your business lines of credit for some future use. Most business owners should follow the 80/20 principal and keep roughly 20% of their business credit reserves as cash set aside for a rainy day. What you are doing is taking money that you are given from a business line of credit and placing it into another account.

A good rule of thumb to follow is that for every $80,000 of business credit that you use in your business, you should hold $20,000 as cash you are seasoning. You can keep the money you are seasoning in any kind of account you like, but most business owners keep money they are seasoning in a business checking account.

Here are some of the good reasons to season money from a business line of credit:
*Keep cash available for emergencies.
*Money is available for salaries during business start-up.
*Make your balance sheet look good with cash reserves.
*Use the cash as leverage or collateral to secure new loans.
*Maintain money to use to repay the monthly payments on the initial line of credit while you build the business.

New business owners should understand that most business start-ups do not achieve a level of profitability and cashflow for quite some time. The proper use of business lines of credit combined with the proper business idea and a winning marketing plan can assure your start-up makes it out of the garage and into the boardroom. Business lines of credit are very flexible tools that allow you to repay them out of money you have set aside from your initial cash draw while you build your dream business!

*God Speed*


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