Business Lines of Credit

Most businesses in their growth phase experience capital shortfalls due to unforeseen operating expenses, uneven cash flow cycles, inventory shortfalls, or when an unexpected opportunity arises. In most of these cases, the need for an infusion of capital is only temporary so it may not make sense to seek long term financing with a loan. Instead, the business may be best served with a business line of credit.

What Exactly is a Business Line of Credit?

With characteristics similar to credit cards and a home equity line of credit, a business LOC provides the ultimate in flexibility and control for business owners who are able to effectively manage their cash flow. Like a home LOC, it establishes a amount of credit from which a business can borrow any amount for any reason, at any time. Like a credit card, it is unsecured in that there is no need for collateral as there is with a home LOC. Most lines of credits require interest only minimum payments which are based on variable interest rates. Interest charges only apply to amounts borrowed, so, as the principal is paid down, interest expenses decline.

The amount of credit that is made available is based on a number of criteria related to the revenue history and current financial condition of the business. Financial stability, strong cash flow, and a profitable outlook are key factors used in determining how much credit is issued.

Why a Business Line of Credit may be Your Best Option

  • It can provide unfettered access to capital when it is needed the most.
  • Interest expenses can be controlled.
  • It doesn't require collateral of any kind.
  • It can be an effective cash management tool.
  • It can be accessed for any purpose - no explanation or repayment projections are needed.

With interest rates near their all-time low, there has never been a better opportunity to open a business line of credit. Our business lending specialists can help you assess your financing needs to help you determine if a business line of credit is the best option for your business.