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    8 Replies Latest reply on Jul 23, 2008 1:31 AM by azmico

    How to use Business Line of Credit?

    azmico Newbie

      A while ago I responded to a mailing from my bank and applied for Line of Credit and it took them so long to reply, that I completely forgot about it.
      2 days ago I got the final documents and now I have a line of credit for 10,000 USD.
      I have sued business credit cards and sometimes AMEX debit cards etc but never used line of credit. I tried to ask some help from the bank and not too sure if I understood the concept. Basically, I make business purchases and then payback the full amount by (due date 30days). I am wondering how exactly this works? I mean if I make a software purchase for 8000 dollarsdo I have to return all 8,000 in 30days??? I dont get it.
      Can anyone help please and fill me in about using line of credit for business and the advantages over credit card?

      Appreciate assistance.
        • Re: How to use Business Line of Credit?
          azmico Newbie
          SORRY..typo error...not 'sued'...'used' instead..
          • Re: How to use Business Line of Credit?
            LUCKIEST Guide
            How to use Business Line of Credit??

            A *line of credit allows a borrower to take advances, during a defined period, up to the preset "line limit"
            and repay the advances at the borrower's discretion.*


            *An operating line of credit is used to provide
            liquidity during the operating cycle of the business. For smaller lines to companies with good credit, there may be no active
            controls on line of credit usage; that is, the customer can take advances
            and repay advances at will. Typically, line usage is only analyzed
            annually, or at renewal.*




            Hope this help, LUCKIEST
            1 of 1 people found this helpful
              • Re: How to use Business Line of Credit?
                azmico Newbie
                Thank you, 'Luckiest'. I appreciate your response. I think I still have to see what others have to say, because 'theoretically' I am somewhat familiar with line of credit, but I have never used it. So just want to hear back from folks who have used line of credit for business and can share their views with some practical examples.

              • Re: How to use Business Line of Credit?
                changemyrate Newbie
                What institution provided the business line of credit?
                • Re: How to use Business Line of Credit?
                  franchize2 Newbie
                  I am somewhat familiar with BLOC's in the state of Washington. Our BofA here, as in Idaho, is slightly different than the rest of the states that BofA is in due to software differences. An important question to know the answer to, assuming 1, either you do business in WA or ID, or 2, it makes no difference because that they operate the same, then, is to find out what is your per diem charge. Once you establish a balance, for example, your $8000.00, AND it is updated in the system (can take a day or two) you can find out how much you'll owe at the end of "X" number of days. Most BLOC's are revolving lines of credit like any other, not installment loans.

                  Other general points I can make: most BLOC's that I am aware of are most often used to afford employee payroll, on days before revenues hit the account, when there's a lag between hard-posting of credit sales revenue, etc. Also, they are useful if you find yourself depositing large checks and needed funds available immediately. Last thing I know: anything less than 10% or so as your interest is amazing. Again, at least up here.

                  Hope that sheds some more general knowledge for you!!