Business FinancesQuestion 1192 of 1605
A line of credit is most useful to a contractor for:
a.Bridging short-term cash gaps between paying job costs and receiving progress payments
b.Permanently financing the purchase of land
c.Paying the CSLB license fee only
d.Avoiding income tax
Explanation
A revolving line of credit provides short-term borrowing to cover the timing gap between spending on labor/materials and collecting progress billings and retention. It smooths cash flow and is repaid as receivables come in.
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Sen Lin, PrepPass Founder · Verified against California CSLB Contractor License Law & Business Exam · How we review
Reviewed by Abraham Chen — Licensed California General Contractor (CSLB License #1101856 — verify)