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Many of the questions we face as fintech professionals are rather intricate. In addition, we focus on streamlining the financing process for companies. For this reason, we are just as at ease explaining the basics of a business line of credit as we are developing cutting-edge fintech solutions to problems faced by small and medium-sized enterprises.
There will be no fanfare or ceremony. Okay, let’s go right in.
A company line of credit: How does it function?
A company line of credit functions in the same way as a personal credit card. It’s a kind of revolving credit that provides companies unlimited access to a sum of money, up to a certain cap. In contrast to the set monthly payments and interest typical with term loans, the costs associated with a business line of credit are only assessed on the funds that are actually used. To learn more about BLoK, follow the link: https://www.gofundshop.com/line-of-credit/.
Are you following along? Here’s a real-world illustration that might help.
Erica’s company, Proof in the Pudding, is a cookie bakery that caters only to online security companies. We’re joking, really. That was just an SEO joke amongst friends. Simply put, Erica is the proprietor of a cookie business open to the public.
A bank agrees to provide the bakery with a line of credit up to R50,000. One of Erica’s major clients has approached her and asked her to prepare a massive batch of cookies for their quarterly staff party. Erica is overjoyed because word of mouth will bring her additional clientele of this magnitude. However, she will require a substantial sum of money initially.
In order to stock up on wheat, eggs, sugar, and other necessities, Erica takes R10,000 out of her company line of credit. Fees will only be assessed against the R10,000 she withdrew, leaving her with an additional R40,000. Then, she makes the R8,000 investment in a second stand mixer. She can get that money out before she has to repay the R10,000. She will only ever be responsible for the interest and fees on the amount of the line of credit that she actually uses.
How do you know whether your firm is eligible for a line of credit?
Business owners seeking financing from a bank or other conventional source should come prepared with extensive paperwork. The following items are necessary when dealing with a conventional lender:
- Financial records
- A balance sheet
- Profit and loss statements
- Your company’s (and maybe your own) credit history
- Comprehensive business strategy
- A request for funding
- Documentation of at least two years’ worth of sales activity
Traditional lenders usually take many weeks or months to decide on granting a business line of credit once an application package has been filed.
Fundshop is a quicker and easier option!
The revolving line of credit offered by Fundshop makes securing capital for your company easy. Here are a few key points:
- Just two minutes are needed to fill out the application.
- In as little as 24 hours, you may be authorized.
- Money will be made available immediately upon agreeing to your conditions.
- Repay us within a year’s time
- Save money if you can settle quickly.
You should prioritize company growth above worrying about financial flow. Working capital management is quick and easy with the Fundshop Line of Credit program.
Before you really need a company line of credit is the ideal time to apply for one. Get started right now; why wait?
