A business line of credit can help many business owners get the necessary funding for their business. If you’re interested in this type of financing or a financial consulting merchant account, just go on reading below.
Financial Consulting Merchant Account and Line of Credit
A line of credit or LOC implies an arrangement between a bank or another financial institution and a customer. The former determines the maximum amount of a loan that the customer can borrow.
If you need a line of credit, you can access funds from the line of credit at any time, as long as you haven’t exceeded the maximum amount established in the agreement and meet any other requirements.
You can use a business line of for various operating expenses like paying suppliers or meeting payroll. You can find some lines unsecured. Others are secured with assets the lender can claim if you aren’t able to pay as agreed.
The qualification standards vary from lender to lender. Most providers will take into account the 5 C’s of credit to figure out the size of the credit line. This is according to Christopher Ward, a small business lending executive for Bank of America. When it comes to the interest rate, lenders will usually take into consideration your personal and business credit scores.
To get easy and affordable funding for your business, consider turning to a reputable alternative online lender in the field. Also, with a respectable payment processor, you can obtain a low cost and reliable financial consulting merchant account, and other merchant services without challenges.
Business Line of Credit: What to Know
A business line of credit offers built-in flexibility, and this is its main benefit. You can request a certain amount, without being obliged to use it all.
A business line of credit is associated with various costs. You might be required to pay fees to open the account, maintenance fees on an annual basis, or fees for making each draw. It’s possible to extract cash from an ATM, but your lender might require you to pay a fee of 2-3% of the advance.
When drawing a parallel between a business line of credit and a credit card, you’ll see the former has significantly higher limits than the latter.
As for term loans vs. lines of credit, when taking out a loan, you’re borrowing all the money once. You’ll usually be required to repay the amount within 5, 10, or even 20 years.
The majority of lenders of lines of credit will want to see not only the basic details about your company, such as your business type, legal structure, and ownership, but also earnings, financial statements, and tax returns.
You can use a small business line of credit typically for meeting your short-term working capital needs. By the way, it can be drawn repeatedly.
So, a business line of credit boasts flexibility, but it can also provide some disadvantages for your type of business. To make the right choice, you should shop around and find the best business funding option for your financial needs.
Author Bio: Electronic payments expert Blair Thomas is the co-founder of high risk payment processing company eMerchantBroker, which offers an exceptional financial consulting merchant account, and other merchant services. He’s just as passionate about his business as he is with traveling and spending time with his dog Cooper.