Team photo
Knaub and Company PC logo

Knaub & Company, PC

Certified Public Accountants

78 Meadow Village Drive, Suite E

PO Box 161030, Big Sky, MT 59716

 

Phone:  406-995-6040

Fax:      406-993-2772

  

Email: knaubco@3rivers.net

November 2018

A Flexible Line of Credit

A Flexible Line of Credit

Need to manage cash flow or inventory levels? Cover an unexpected repair? Then a business line of credit probably makes sense. If you’re looking to open your first business line of credit, you should understand what it is and your choices.


LINE OF CREDIT
A business line of credit is similar to a credit card because both offer an available amount, or limit, you can spend. Both charge interest on the credit you use.


Depending on how old your company is and its demonstrated sales and profits, a lending institution may offer you a secured or an unsecured line of credit. Having a secured line means the lender can take possession of collateral named in the contract in the event of non-payment.


HOW IT WORKS
Your business may have already prequalified for a line of credit, in which case the lender has no doubt already notified you of this status. As with a credit card, you may make a lump sum payment or monthly installments, with the latter paid off at variable interest rates that can be hefty, depending on your business’ credit rating.


Your company’s creditworthiness may be determined, in part, by a credit report drawn on the business and/or a credit report on your personal finances, depending on the legal structure of your business. There are also some online lenders that will offer short-term lines of credit and loans that demand repayment within a few weeks to a few months, usually at higher interest rates than a bank or similar institution.


ASK AROUND
When comparing lines of credit, shop not only by interest rates, but also by examining total fees that lenders charge for account maintenance and withdrawals. Don’t forget to ask other business owners and your accounting professional for recommendations.


SUBSCRIBE

Enter your Name and Email address to get
the newsletter delivered to your inbox.

Please include name of person that directed you to my online newsletter so I can thank them personally.


CONTACT US

Enter your Name, Email Address and a short message. We'll respond to you as soon as possible.

The information and opinions contained in this web site are obtained from sources believed to be reliable, but their accuracy cannot be guaranteed. The publishers assume no responsibility for errors and omissions or for any damages resulting from the use of the published information. This web site is published with the understanding that it does not render legal, accounting, financial, or other professional advice. Whole or partial reproduction of this web site is forbidden without the written permission of the publisher.