September 24th, 2007 | 
Author: 
Business Venture Solutions asked:
As discussed in our previous article, we discussed the usage of a business loan and how you ultimately repay your lender for providing you with lump sum financing. In this article, we are going to focus on the mechanics of using a business line of credit. This was touched on previous in our first article that showcased the pros and cons of using a business line of credit versus a traditional business loan.
Again, a business line of credit operates very similarly to that of a large credit card. You are often provided with checks from which to draw down the principal. With a business LOC you are typically only required to pay interest on the outstanding principal balance due. Business lines of credit operate on a finite timeline, and more likely than not, you will be required to make regular principal payments or the LOC will convert to a standard loan after the term of the credit facility is complete.
As such, you can calculate your anticipated payments at the close of the credit facility term. This can be simply done by knowing what the interest rate will be on the outstanding principal balance. BusinessLOC.com has developed an expansive number of MS Excel spreadsheets that you can use to determine the monthly payment that you will owe on the credit line (a monthly basis), as well as what the payments will be if the credit line is converted to a standard business loan at the end of the facility’s term. As always, if you should have any questions regarding the mechanics of a business line of credit or any other type of business credit facility then you should consult with a certified public accountant or business advisor to assist you in this process.
America Line Of Credit
As discussed in our previous article, we discussed the usage of a business loan and how you ultimately repay your lender for providing you with lump sum financing. In this article, we are going to focus on the mechanics of using a business line of credit. This was touched on previous in our first article that showcased the pros and cons of using a business line of credit versus a traditional business loan.
Again, a business line of credit operates very similarly to that of a large credit card. You are often provided with checks from which to draw down the principal. With a business LOC you are typically only required to pay interest on the outstanding principal balance due. Business lines of credit operate on a finite timeline, and more likely than not, you will be required to make regular principal payments or the LOC will convert to a standard loan after the term of the credit facility is complete.
As such, you can calculate your anticipated payments at the close of the credit facility term. This can be simply done by knowing what the interest rate will be on the outstanding principal balance. BusinessLOC.com has developed an expansive number of MS Excel spreadsheets that you can use to determine the monthly payment that you will owe on the credit line (a monthly basis), as well as what the payments will be if the credit line is converted to a standard business loan at the end of the facility’s term. As always, if you should have any questions regarding the mechanics of a business line of credit or any other type of business credit facility then you should consult with a certified public accountant or business advisor to assist you in this process.
America Line Of Credit
About Wade Henderson
Wade Henderson: Domestic and International Business Finance since 1995 specializing in challenge situations. "We prefer to find a way to get your loan done as opposed to finding a reason to turn it down.” Connect with me on Google+
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