Lines Of Credit
A commercial line of credit has no fixed payment terms and is based on an adjustable market interest rate. It is used to fund short term working capital needs, cash flow, purchases of seasonal inventory and other operating expenses, as needed.
Amounts for lines of credit available are usually based on the businesses’ past annual revenue and projected cash flow demonstrating the ability of the business to pay for the debt. Accounts Receivable and Accounts Payable information are also key elements to setting line of credit amounts.
A positive cash flow and debt credit ratio set by the lending institution is required to qualify for a line of credit.
Most lines of credit are renewed annually, however, the structure of the line is flexible and can be accommodated to the needs of the borrower. Payments are usually interest only but may require annual clean-ups.
EGS will assist you in deciding on the type of line of credit that is best for your business needs.