Line of Credit

Line of Credit

LINES OF CREDIT

Generally a line of credit,  means the funds are available for the company to use for a period of one year up to the credit limit. The company may use as little or as much of the line of credit at any time during the year that you desire.

In taking down on the line of credit, the company will have to sign a note. The notes are typically for 90 days. However, where a line of credit is tied to specific assets, such as inventory financing, the repayment period under the loan could be for a period of up to two years.

When loans are made on a line of credit that is not tied to a specific asset, they tend to be on a revolving 90-day note basis. The notes can be renewed through the mail. Typically the first note is paid off by writing a new note. The bank will rubber stamp the old note saying “PAID BY RENEWAL” and return the first note to you.

For a company that is growing, a line of credit that has to be paid off entirely will not be adequate. Therefore, a combination line of credit, which is essentially short-term money with a longer amortization, would better suit the company’s needs. This combination would be tied to specific assets, (i.e.), equipment, inventory, accounts receivable.

Once you have acquired an unsecured line of credit, we recommend you use it as soon as possible. This will start you on the road to a bigger line of credit. At some point throughout the year, you should take the full amount of the credit line. It looks better on the bank record, as odd as it might seem if you borrow the full amount on your line of credit and pay it back. For example, if your credit line is $200,000 and the most you have used is $50,000, a similar company that used its full line of $200,000 and repaid it can more easily justify a new $400,000 credit line than you.


Unsecured Line of Credit

PURPOSE

To obtain funds for the following uses:

Business expansion
Pay bills
Purchase additional inventory
Buy-out business partner
Purchase commercial equipment
Infusion of working capital
WHY UNSECURED?

Generally no application fee.
Generally no up-front fee.
No collateral used as security.
No financial’s on smaller lines
No tax returns on smaller lines
No business plan need be provided
No UCC filings against any assets of client
PARAMETERS

No Doc Programs available to specific dollar limits.
2 – 7 years loan terms depending upon credit and dollar amount.
Funding can be in as little as 1 day. Typically within 1 week.
Pricing ranges from Prime +1% to Prime +5%.
Dollar amounts from $10,000 – $1,000,000.
REQUIREMENTS

1. 700 Credit score on all three bureaus minimum.

2. 2 years in business minimum.

3. No Bankruptcy showing on credit report.

4. In the last 3 years the client can not have had:

a. Late pays

b. Collections

c. Judgments

d. Liens