A business line of credit is certainly an unsecured and ready source of funds provided by a lender or banking institution. These funds can be used for business as well as personal needs by the applicant. The applicant can borrow or withdraw funds from the line of credit loan. It can be done either through bank transfer or through cheques.
Each applicant is allotted a limit for credit and they can withdraw the funds as many times as they want. In this case the loan is repaid with interest. The interest is paid on the outstanding balance as per the terms and conditions declared between the lender and borrower. During the tenure the borrower can also increase his credit limit.
Business line of credit loans can also be used for personal usage such as home renovation expenses, medical expenses, and also child educational expenses. Compared to other loans such as personal loans and credit cards. A business line of credit carries significantly lower interest. It gives variable access to funding the applicants.
Types of business line of credit:
Business line of credit is classified into two significant categories that is secured line of credit and unsecured line of credit. In a secured line of credit you have to give surety to open a line of credit account. The amount is to be paid without any failure. If there is a due in the payment, the lender can be liable to take over your asset.
Personal line of credit is a type of facility that is made available to individuals to meet urgent expenses. It can also be a long-driven expense for big purchases, home renovation, child education or meeting sudden financial requirements etc. It is usually offered to a person with a high credit score. They are also required to have a good credit history with a favorable debt ratio.
Personal loan and Business line of credit:
Business line of credit is a very flexible credit option for every applicant. It allows withdrawals according to the availability and other requirements of the borrower. In such a case the interest shall only be levied on the borrowed amount. The interest shall not be lived on the entire credit limit.
There is no compulsion to use the entire business line of credit. The total amount of money can be repaid once or in monthly payments. It is spread across a tenure of about 4-5 years as per the terms and condition of the lender providing the money. The line of credit offers good stability to the borrower.
A personal loan is applied on a similar basis as it is in a business line of credit. The interest in personal loan is charged on the whole whole amount that is given to the borrower. In such a case, once the personal loan is completely paid, the loan account of the borrower is completely closed by the lender.
The advantages of a business line of credit includes lower interest rates, high borrowing limit, cost effective, flexible repayment option, constant access to funds and best for long term project.
For more information please visit https://www.usfundsource.com/small-business-lines-of-credit/.
Business line of credit loans can also be used for personal usage such as home renovation expenses, medical expenses, and also child educational expenses.