Murfreesboro Business Line of Credit
Small businesses need to be able to adapt to changes, especially if they are growing or having uneven cash flow. If you are a small business in Murfreesboro, TN and need quick access to cash along with flexible terms for repaying your borrowed funds, you can benefit from a business line of credit as an ideal financing solution.
You can always consult with our advisors to see what is the best way to obtain financing and cover your expenses or cash flow gaps. A line of credit is a kind of loan that gives you ongoing access to cash that you can withdraw whenever you want or need it. You will also pay interest only on the amount that you withdraw, and you can choose to pay your balance in full or make a partial payment.
Easy to use and understand, a line of credit works very similarly to a credit card. If you have used a credit card before, you will have no issues at all using a line of credit. Your credit will replenish itself as you make your payments, and you won’t have to apply for a new loan every time you need more cash.
Applying is free and will not affect your credit score.
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Using A Line Of Credit
The biggest reason why businesses open a line of credit is to gain access to short-term funding. Most companies use these funds to support financing for operational expenses such as supplies and payroll, or for increasing their inventory. There are also small businesses that rely on corporate financing options like these to get off-season working capital.
Unlike many standard business loans, a line of credit is a good choice for small businesses that are looking for ways to manage their cash flow. The funds are typically drawn by using a checking account, a small business credit card or even a mobile banking app.
There are many advantages of a line of credit in the way it aligns to your business needs. Plus, maintaining it can also help you build a solid business credit rating and position your small company for better loan terms if you seek financing in the future. According to experts, every small business owner should consider a modest line of credit at first in order to pay off the debt quickly and build a good credit profile.
With a business credit line, it is all about the cash flow that you need. You can use this option when your business is not taking enough money to pay the bills, or when you need extra financing for an important investment. The good thing is that a line of credit can smooth out your cash flow and you can repay the amount through monthly installments.
How To Obtain A Line Of Credit In Murfreesboro ?
To obtain a line of credit in Tennessee, you need to fill out an application form with some of your business details. Keep in mind that you need a credit line with an amount that is not too large or small – but just right for your business. Obviously, this is different for each business, but the general rule of thumb is that a business needs to have $1.25 of income to support every $1 of debt that it has.
Requirements
In order to get approved for a business line of credit, you will need to apply and get your financial statements and assets reviewed by the prospective lender. Some of the common requirements that you can expect when applying for a credit line include the following.
- Collateral: Each line of credit is safeguarded by collateral which you provide. This may include but is not limited to real estate, equipment, physical inventory or accounts receivable.
- Business operating time: You will need to provide the operating time of your business in order to apply for a line of credit. Some lenders only consider businesses that have been in operation for at least two years.
- Financial statements and reports: Lenders will require extensive financial statements along with income tax returns that span at least two years to consider your business fit for a line of credit.
- Profit and revenue: You need to generate revenue to be eligible for a business line of credit. Proof of revenue is commonly requested by lenders. However, if you are unable to satisfy these requirements, you may have the option to provide collateral.
- Guarantees: If your business is part of a larger organization, the lender may need the organization to guarantee for its subsidiary before it gives a business line of credit to it. As a small business owner, you may need to make a personal guarantee.
- Economic ratios: There are some additional economic ratios that a lender might request which include the debt to equity ratio, debt service coverage ratio, fixed-charge coverage ratio, current ratio, etc.
If you are interested in obtaining a line of credit in Murfreesboro, you are on the right page. For more information you can always
contact our advisors at
Business Loans Murfreesboro to see if a line of credit is the right option for your business.
Interests and fees associated with a business line of credit
- Origination fees: These are calculated within your credit limit. For instance, if you have a $200,000 credit limit and your origination fee is 2%, it means that you will owe $4,000 at the time of opening your account.
- Monthly/annual access/maintenance fees: These are collected as flat fees or a percentage of your credit limit.
- Draw fees: The funds that you use are subject to draw fees whenever you withdraw money. For instance, if you withdraw $50,000 and there is a 2% draw fee, you will owe $1,000.
- Additional fees: There may be additional fees associated with your business line of credit. Familiarizing yourself with them is the best way to understand whether they are right for your needs.
Now is the best time to apply for a business line of credit. Contact us today and expect a response within 24 hours from some of our advisors. For more questions, feel free to call us now.