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LINES OF CREDIT, YES I DO
can you give me a rundown on how that works?
A lender will advance a loan equal up to an agreed percentage of eligible receivables usually no more than 85%. Depending upon the lender, eligible receivables are those from creditworthy domestic business customers which are no more than 60 days past due. Some lenders will institute concentration and cross aging limitations as well.
The lender will charge interest based upon the actual money borrowed. Depending upon the lender, rates could start from as little as Prime + 2. Less creditworthy borrowers could expect to pay rates as high as Prime + 6 or more.
Hope this is helpful.
Just to add to Marshall's response, some banks will investigate the companies that owe you the cash, especially if there are large concentrations. Some lenders may also limit advances against any single client. Overall it can be a good way to secure credit, but the A/R need to be percieved as having value by the bank.