Lines of Credit
Take advantage of one of the most flexible financing solutions available to pull in extra cash when you need it. Use the funds anywhere in your business you see fit, pay down your balance, and borrow again. We’ll help you open a line of credit that’s custom fit for your business.
What is a Line of Credit
A line of credit is a credit account that remains open for you to use again and again. You can take out as much as you like, up to your credit limit. When you pay back into the account, you free up the balance. Lines of credit can be useful when you need to smooth out the yearly sales cycle. If you see peak revenue in the summertime but lack growth in the winter, you can use a line of credit as working capital during the slow months. When summer comes around again, use the influx of cash to lower your account’s outstanding balance.
Secured
A secured line of credit lets you use your business’s assets to secure a low-interest rate, high-value loan. Get a percentage of your real estate, equipment, or other asset value in the form of an open credit account. A business with property worth $250,000 could use it to secure a line of credit. If the lender offers 80% of the value of that property, the business would have an open line of credit with a $200,000 limit. As long as the business satisfies the line’s payment terms, the property will remain with the business.
Unsecured
An unsecured line of credit does not require assets to secure the line. To qualify for an unsecured line, a business must have a strong record of paying on time and a healthy overall financial picture. Unsecured lines normally have lower borrowing limits and more stringent qualifying criteria than secured lines. However, business assets are protected should there be a problem satisfying loan payments. If you’re unsure which line of credit is right for your business, our knowledgeable staff is happy to answer any question you may have.
Advantages of Lines of Credit
- Borrow what you need when you need it.
- Lower interest rates than credit cards.
- Get financing, even with a low credit score.
- No interest is charged on lines without a balance.
Frequently Asked Questions
When are Lines of Credit not a good fit?
Not everyone is adept at managing revolving debt or needs to keep an open account. If your business has short-term needs but doesn’t anticipate borrowing frequently, we can show you financing alternatives.
How do Lines of Credit affect my credit record?
Lines of credit are in the same debt category as credit cards – revolving debt. Having an open account with a low balance can be a positive influence on credit. Carrying a high balance or making late payments can negatively affect credit.
What is a non-recourse Line of Credit?
Non-recourse lines limit the lender’s ability to go after company assets if the loan payments are not made. They go one step beyond unsecured lines to keep assets out of harm’s way. If you’d like to discuss how you can open a non-recourse line of credit, contact our office.
Can I refinance a Line of Credit?
Yes, in most cases you can replace a line of credit with another line. This essentially involves opening a new account and transferring your balance before closing the old account. It’s best to double-check your line’s terms and conditions before opening a replacement account. If you’re looking for a new line of credit, we can help!