Business Line Of Credit For Retailers
A business line of credit is an extremely useful loan option for many small retailers. It's also sometimes known as a revolving credit line. As with a personal loan, it is able to access your existing credit line, allow you to make timely repayment, and then fully access the available credit line again. You are not borrowing the entire amount on this line, so if your store does not need to use the all of the funds, you do not have to pay interest on the portion of the loan that you did not borrow, nor do you have to pay back all the amount at once. You access the funds as your store needs them. Perhaps you have the opportunity to purchase a pallet of brand name handbags on Bstock.com or Liquidation.com, and you don't have enough in your checking account to cover the cost of the pallet, or you simply would prefer not use your savings to purchase the pallet, so you would access your line of credit to make your wholesale purchase.
There are several distinct advantages to using a business line of credit instead of a personal loan. In the case of a personal loan, once you've made your repayments and the loan has been paid off, the lender requires that you make another payment to ensure that the loan is active (i.e., you are still required to make repayment on the original credit line). You do not have to make this additional payment until your lender says it is time to do so. Businesses don't have this requirement in most cases.
Although most banks and other lending institutions do offer business lines of credit, they generally charge very high interest rates. The interest rate is often two to three times higher than what you would pay if you were looking at a credit score personal loan from a bank or other lending institution. This may seem like a good idea initially, but your business credit scores may suffer as a result.
There are many retailers that don't have steady access to cash flow, especially seasonal retailers. For example, many businesses wait until they get their cash flow from an incoming client before they start paying their invoices. When their cash flow does not arrive for some time, businesses run out of money to pay their bills. Without enough cash flow, these businesses are in danger of going under, especially if the opportunity to buy a large closeout deal happens at a time of low funds.
Most unsecured business lines of credit work like personal credit cards do. You can charge up to 25 percent more on your bill to increase your credit limit. As you charge up your limit, you will receive more credit card offers in the mail. These credit card offers come with very high rates of interest. In fact, many businesses that use these unsecured business lines of credit to wind up having to write off all of the debt that they racked up during the course of their business.
When you are looking for a business line of credit, you want to make sure that the interest rates are low. If they are too high, you won't be able to afford the payments and you could find yourself owing more money in the end than you would ever before. However, if the rates are too low, you won't receive the best rates because you are not able to pay back as much as you took out in the first place.
The purpose of a business line of credit is to help small businesses get through tough times. The best kinds are short-term and do not have a repayment schedule. As such, if you are looking for a small business credit profile that will help you manage your finances, you should consider lenders who offer a short-term business line of credit, along with lower interest rates than you would find elsewhere.
You can find several lenders offering unsecured business lines of credit at Wells Fargo. These include various lending institutions that specialize in commercial and investment property loans. These lenders are able to secure the best interest rates possible for your business by evaluating your business as collateral. They can also provide you with one of the most competitive repayment terms available. You can access this information by visiting the secured website linked to below. While you are there, you can also apply for a free-business line of credit and learn more about the various features that are available, as well as the interest rates and other fees associated with them.
Remember, one of the most important calculations is whether the wholesale merchandise that you are purchasing will give you enough of a profit to offset the additional interest that your store will incur when you access the loan, especially if you plan on selling the merchandise over an extended period of time.
Below are a few resources for obtaining a line of credit for your shop: