Line of Credit

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Line of Credit
Line of Credit Lenders

There are many lenders that make lines of credit available to businesses. Line of credit lenders include banks, online lenders, cash lenders, hard money lenders and private equity lenders to name but a few.

A line of credit is an agreement between a business and a lender that makes a set amount of credit available to a lender. Under the agreement, the business can use the credit when it needs. As with a loan the business will have to interest on the credit.

The difference between a loan and a line of credit is that the credit is made available to the business again after it is paid off. This is why a line of credit is sometimes called a revolving loan or an open-ended loan.

Types of Line of Credit Lenders

The most used line of credit lenders are banks which make lines of credit available to business through checking accounts and credit cards. Most banks will give a business with a good credit record that runs a certain amount of cash through its accounts usually around $10,000 a line of credit.

Another very common line of credit is business credit cards. These are simply credit cards issued to business for business purposes. The business uses them to cover its day to day expenses and other expenditures. Like bank lines of credit, credit cards are very convenient but interest rates can be high.

Cash or hard money lenders loan money directly to businesses. Unlike banks these lenders will lend to businesses with bad credit, speculative businesses and startups. These line of credit lenders are very easy to use but they charge very high interest rates. Many of them also demand very quick repayment.

Private equity lenders will issue lines of credit secured by a stake in a business or property the business owns. Like hard money lenders private equity lenders are easy to use but they often charge high interest rates. A drawback to these lenders is that they will seize property if they are not paid back.

How to Find Line of Credit Lenders

The easiest place to find a line of credit of lender is online. Most line of credit lenders operate online and do take applications online. Most line of credit lenders disperse funds electronically as well.

Bank websites will tell you if the bank issues lines of credit and if you are eligible for one. Most bank websites will let existing customers sign up for a line of credit online and start using it quickly through their credit card or checking account.

It is possible to apply for most business credit cards online. A drawback to business credit cards is that it may take up to a week to get a credit card shipped to you so you can use it. Another drawback is that applying for a business credit card online can damage your credit rating because a credit check is run when you apply for one.

There are hundreds of hard money and cash line of credit lenders that operate online. These lines of credit are very easy to apply for and get. They are also very costly and often hard to pay back.

Choosing a Line of Credit Lender

Finding a line of credit lender is often critical for the survival of a business. Choosing the wrong line of credit can cost a business a fortune in interest charges and fees.

Every entrepreneur should spend as much time as possible choosing a line of credit lender. Taking the time and effort to find the right line of credit lender can you save a business a lot of time and grief.