Blog Archive

Tuesday, August 12, 2008

Understanding Unsecured Business Lines of Credit

Understanding Unsecured Business Lines of Credit

Here is response to an inquiry about Unsecured Business Lines of Credit:

1)You are looking to for a $300,000 line of credit. For unsecured lines of credit with no income or asset verification required - the maximum line size is $50,000. To achieve the amount you desire we would have to string together lines of credit from several different banks and credit companies. The EXACT amount is yet to be determined. It could fall short of the $300,000 maximum depending on what each bank approves and whether you accept all lines offered or you decline some.

The agreement you sign is a standard document that we use for ALL of our commercial and business financing clients. The 90 days time frame is also standard for our agreement as most commercial financing averages 60+ days to close and fund. Approvals for the individual lines of credit are much quicker and can start coming in as quickly as 10-14 days from submission.
Most are set up within 30 days. In this instance, we'd be happy to adjust the time frame to match more closely with the program you are applying for.

2) Lines of credit usually are open for up to 20 years. Usually a maximum of 10 years as a revolving line of credit. Then, at the end of the first 10 year term, the balance (if any) is converted to a 10 year amortized loan.
With multiple lines of credit, terms may vary, but this is the most typical set up.

3) The set up fee is a one time fee when the lines of credit are activated and made available to you. No other fees apply other than the agreed upon interest and any late payment fees, when applicable.

4) An initial $500-$600 is the only thing you pay now. The set up fees for each line of credit are paid at the time the lines of credit are activated and can be paid through the line of credit (so you actually start out with a small
balance) or can be paid separately by check or credit card.

5) The origination fee IS included in the bank fees of 7% - 10% on page 1.
That is NOT an additional amount.

6) WE do not issue you the lines of credit. We have over 130 commercial banks and credit card companies we work with. We know the guidelines for the ones that issue unsecured business lines of credit. We know you meet the basic guidelines for most of them however we do not know the exact amounts you will be approved for from each one at this time. Some actually require application fees be submitted with their applications so as a matter of protocol, we do not formally submit applications until a financing agreement has been signed and a deposit collected from a client. We do not collect deposits from clients that do not meet basic approval guidelines.

7) As mentioned earlier, the agreement you sign is a standard document that we use for ALL of our commercial and business financing clients. And there ARE documents required for all our financing programs, including this one.
For unsecured business lines of credit, the documentation is very limited.
Usually proof of identity (copy of drivers license), Proof of business ownership and status of business (articles of incorporation and confirmation your corp. / LLC is in good standing within the state it is registered), proof of business checking account (voided business check) and in some cases a few other items.

8) Lines of credit are revolving like a credit card. Interest only payments or 1% of balance monthly is how most work. No fixed amortization until after the initial 10 year period ends for most of them.

I hope this answers most of your questions but don't hesitate to call or email me directly if you are still unclear on any of these points or anything else that wasn't addressed in this email.
Your #1 Source for Commercial & Business Financing
Office: 863-298-8900 eFax: 863-877-4456 Cell: 813-833-3132

1 comment:

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