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Business Loans
Business line of credit  
 

What kind of loan is most commonly used to provide working capital?

A Business Line of Credit (Line) is designed to meet the short-term working capital needs (inventory purchases or to pay operating expenses).

A Line is one of the most common forms of financing offered by financial institutions. Generally, collateral and loan guaranty are not required for approval, unless the applicant’s basic credit criteria is not met. If a business is in process of purchasing a fixed asset or obtaining permanent working capital (over one year), a Line will not be the best financial tool. Alternatively, a term loan would be the most preferred form of financing.

Amount
The amount of the Business Line of Credit (Line) will depend on the firm's historical and/or projected annual revenues and cash flow. A positive cash flow will be required. This means the firm has to be profitable and demonstrate that debt can be repaid on a regular basis.

The Line amount will be determined by the firm's total revenues and cash flow. If a firm's revenues are only $100,000, it will be difficult to qualify for a $100,000 line unless the firm projects increased revenues and cash flow. The firm may borrow up to the maximum amount approved. This may be done in one lump sum or incrementally.

Repayment Terms
A Line is generally revolving and therefore will have no fixed terms. Its first year repayment terms may require only monthly interest payments to be made.

Typically, a Line will require full payment (principle and interest) of the amount drawn prior to the maturity date.

The business may repay any amount borrowed and re-draw funds as needed without exceeding the authorized amount.

Collateral
Collateral, in general may not be required unless credit criteria is not met.

Financial Statements
Certified business and personal tax returns for the past three years, personal statement and other supplemental information are required for this type of financing. These documents should be ready prior to submission of an application.
 
FAQ’S (FREQUENTLY ASKED QUESTION)
is a business line of credit based on your personal credit?
Yes,any financial institution that would extend a business line of credit,relies on the applicant credit background,since this...
   
How long does it normally take for a bank to approve a business line of credit?
...you gave them all the information maybe 24 -48 hours. they run the credit report in 20 minutes and can give you an answer the next day. or...
   
How do I get a business line of credit?
Apply for a business ID# from the state and apply for a credit card or a loan from a bank. The ID# is the only difference in personal credit and business credit.
   
we started a trucking co. 3 mths ago. where is the best place to get a business line of credit?
...time in bus., your best bet is getting as many unsecured business credit cards and operate off those credit lines.
   
I have a entertainment business. It's new and off to a great start. How would I obtain a line of credit ?
The best way to start a business line of credit is to speak to the bank where you currently maintain...
   
What is a reasonable annual fee for a business line of credit?
if its a big bank than its free
   
how hard is it to get a small business line of credit?
...on many factors: your credit rating, the business plan being accepted as...will profit, the amount of the loan request, your...
   
Mother loaned money to me for my company thru a line of credit against her house and business shut down.Help!?
You better take out a loan to pay back dear mom.
   
Which bank offers the best Line of Credit for a business?
It's always best to try a local bank, they have interest in your community while the bigger banks are less personable.
   
What are the terms of repayment on a business loan from a bank?
...different. It might be a simple business credit card, a revolving working capital line of credit, a letter of credit...
   
Why does a small business have to pay a fee in order to get a credit report built & scored?How to do quicker?
to cover the processing charges
   
fastest way to establish business credit to get business loans?
...Staples or DELL)5. Apply for a business credit card - giving your business EIN instead of your SSNI recommend reading the article...

Asked by coleycole1234 - 5 months ago - Small Business - 2 Answers - Resolved Questions
   
how do i establish credit for my new small business?
...you lines of credit (start with Staples or DELL)5. Apply for a business credit card - giving your business EIN instead of your SSN
   
Im looking for some capitol to expand my small business.?
You could apply for a business line of credit. They are usually secured...about Prime + 1%. The line would be renewed once...
   
how can i get corporate credit without a personal guarantee?
...go through your bank. They probably offer a revolving business line of credit, which you can tie to a credit card.
   
I have a new small business. How can I establish credit for my business quickly?
One of the biggest mistakes I made in business was not establishing a line of credit. To say that "if you make money you won't need it" is a mistake.
   
What are floor plan lines of credit?
...then maintain an Inventory while maintaining the cash flow of the business without millions of dollars of capital being invested in...
   
How does a line of credit work?
Line of credits (LOCs) are generally available through...as security. If you own a small business, basically your collateral could...
   
What are the 3 types of business and their characteristics,advantages and disadvantages?
...Unlimited liability of debt, meaning that creditors can come after the...personal property if the business fails, the business...
   
I would like to start my own home business but I don't have a credit card. What do I do? I need HELP!!!?
...company would approve you for line of credit, chances are also very high...lend you loans. Having a business plan is not enough; some...
   
How could i get a business loan?
...can not get a business loan to buy a...a home equity line of credit or a mortgage...up to 75%-80% of the market value...
   
What is the importance of financing for a new business?
...getting income.So finance your business with capital if at all possible...loan if you need to. Get a line of credit so that you can have short...
   
how easy is it to get a small business grant?
...minority-owned business enterprise or women-owned business enterprise. But this line of credit is available only to transportation related...
   
I started a real estate business, any suggestions on how to build business credit? I'm trying to buy a 4-plex.
...HOW to build the BUSINESS credit too.There are...apply for a credit line using your own...CoD type order.Of course you will...
   
What is a business LC?
LC? LOC is line of credit. In simple terms, it is an available...credit from the bank that a business can borrow at its descretion...
   
 
 


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