A Line of Credit (LOC) is a preset borrowing limit that can be tapped into at any time. You can take money out as you need it until the limit is reached, and as money is repaid, it can be borrowed again in the case of an open line of credit.
A LOC is an arrangement between a Lender and your Company that establishes the maximum loan amount that you can borrow. You can access funds from the line of credit at any time as long it does not exceed the credit limit set in the agreement.
A line of credit has built-in flexibility, which is its main advantage. You can request a certain amount, but they do not have to use it all nor pay interest on what they do not access.. Rather, you can tailor their spending from the LOC to their needs and owe interest only on the amount they draw, not on the entire credit line.
In addition, you can adjust their repayment amounts as needed, based on their budget or cash flow. You can repay, for example, the entire outstanding balance all at once or just make the minimum monthly payments. Call us today ay 610-653-2170 to discuss the direct Benefit of obtaining a Business Line of Credit.
By and large, lines of credit are not intended to be used to fund one-time purchases such as houses or cars—which is what mortgages and auto loans are for, respectively—though lines of credit can be used to acquire items for which a bank might not normally underwrite a loan. Most commonly, individual lines of credit are intended for the same basic purpose as business lines of credit: to smooth out the vagaries of variable monthly income and expenses or to finance projects where it may be difficult to ascertain the exact funds needed in advance.
Consider a Business Owner or self-employed person whose monthly income is irregular or who experiences a significant, often unpredictable delay between performing the work and collecting the pay. While said person might usually rely on credit cards to deal with the cash flow crunches, a line of credit can be a cheaper option (it typically offers lower interest rates) and offer more-flexible repayment schedules. Lines of credit can also help fund estimated quarterly Tax payment.
In short, lines of credit can be useful in situations where there will be repeated cash outlays, but the amounts may not be known upfront and in situations that require large cash deposits—equipment being one good example.
Instant Funding: Capital is replenished in your account within seconds every time you make a withdrawal.
Only pay for what you borrow: Withdraw what you need, when you need it. And pay interest just on the financing you use.
Access more funds automatically: Receive automatic credit limit increases when we review your credit profile and determine if you qualify.
Business credit building: Help build your business’s credit by making on-time payments, which we report to the credit bureau.
Revolving credit: Apply once and funds replenish when you pay them back, so long as you make timely payments.
No prepayment penalties: Get more flexibility by paying off your line of credit anytime you’d like, with no penalty or fee.