Business Line of Credit Rates
The business line of credit or BLOC is an option of funding different small businesses with a limited amount in
the credit line. In the times of need the business woman/ man can easily withdraw the money and give support
to his/her business economically. This line of credit provides a go to cash by revolving line of credit for the
borrowers who undertakes business that incurs business expenses. It works to the most like a credit card
where the amount drawn, only needs to paid back with specified rate of interest. Here, it is only pay interest.
The rates for the interests starts varying around 5% till 20% depending upon the lender. The rates are often
decided over the features of the business for which the person is borrowing. The unsecured BLOC are lend by
various credit unions and also traditional banks. One of the leading union of America, i.e, the small business
administration or SBA allows it’s lenders to charge 4.5%-6.5% of interest rates on the business line of credit.
Business Line of Credit Calculator
The above mentioned credit line is of great use to the business persons who falls short off money suddenly.
The instant hard cash helps to mend the some how caused cash flow gaps or for any purchasable inventory.
Now to calculate the repayment of the loan monthly, we need a calculator.
The calculator of business LOC, lets the person input the borrowed amount of loan with the rate of interest and
also the time span that will be taken for paying the whole money back. Answer will be shown in the calculator
which indicates the monetary payment in monthly basis for repaying.
Also, sometimes the lender might charge some fees which will in turn get added to the calculator and
henceforth show the borrower the result that will be inclusive of all the fees. Examples of such fees are draw
fees, maintenance fees etc.
Business Line of Credit vs Loan
A business loan advances the whole lot of amount asked for the loan by the borrower at a particular stroke.
Then the process of repayment occurs in addition to the interest rate. There are 2 types of business loan, one
is short term that is also know as loans for working capital and another type is long-term loan.
Both of these two have much in common, though there lies few dissimilarities, which are,
The business loans are basically instalment credit whereas the business LOC is a revolving one. Each loan
under business loan, has been specified for a particular purpose and it cannot be used for any other
requirement at all. On the other hand the business LOC allows to use the money in a wide range wherever one
wants to use in his/her business.
Commonly, business loans are of heavier amount than the business LOC. The loans for minimizing risks on the
part of the lender takes up a secured asset as a collateral whereas the lines of credit are generally unsecured.
Business Line of Credit For Start up
As soon as a new start up has reached a minimum of 6 months, that business may apply for a business LOC.
This LOC acts mostly similar to business credit cards but the revolving credit line provides the business with
more time to repay and higher credit facilities.
For receiving this line of credit, the business person needs to qualify the required credit score which is 500. The
best rates of LOC will be received only if the credit score is more than 650.
Bank accounts in celebrated banks helps to get the business LOC with the best credit facilities. The examples
are Bank of America, Wells Fargo, PNC Bank etc.
Click here to check out Business Line of Credit Calculator.
Business Line of Credit Bad Credit
In order to acquire a business LOC, the lenders also the banks are going to keep an eye on the credit score of
the business. Not only that, the lenders might go beyond that and check the personal credit score of the owner
of the business.
The only reason behind checking for the personal credit is that the lenders want to be assured of their money
which they will be lending. The one who is giving the money will definitely want to check how the borrower
manages his/her finances.
The bad credit score will not fetch the borrower any good amount of business LOC. That poor credit gets
disqualified by the lender and hence nothing is achieved by the borrower for the bad credit.
The basic requite of obtaining the line of credit is that, the annual revenue of the business needs to be $50000
and $100000 for the online lenders and the traditional lenders respectively. The business LOC are mostly
short-term for immediate finance.
Thus, the above topic has been dealt with much care and probably it has helped my readers to get a minimum
outline knowledge about Business line of credit.
Source: Business Line of Credit