Business Line of Credit with First Castle Federal Credit Union
First Castle FCU offers a line of credit that was designed with small businesses in mind. This LOC can be used as line of credit attached to your checking account or available funds to cover everyday business needs.
Here are just 5 of the Reasons to Open a Business Credit Line
A line of credit is like having a loan on tap: you withdraw money as you need it, up to a certain amount agreed to by First Castle FCU. If you know you will need some extra money over time to run or expand your business, a business credit line may be the perfect solution.
First Castle FCU has credit lines that may be secured or unsecured; many business owners prefer business lines of credit over loans. Here are some of the advantages of opening a business credit line.
1. Lower interest rate than credit cards.
While rates for credit lines are generally higher than conventional loans, Credit Unions typically offer lower rates and they are still lower than credit card rates.
2. Solve cash-flow problems.
A credit line can help you even out cash flow when short falls are predictable, seasonal, or specific to your individual business. For example, if you routinely purchase inventory that you won’t sell for several months, or your business revolves around a certain time of the year, a line of credit can be a great option.
3. Make purchases.
There may be times when you need to buy equipment or inventory that are too expensive to put on a credit card that the interest rate is too high, or you do not want to take out a conventional loan. A credit line can cover these costs. A business line of credit is not recommended to finance property or major equipment or to pay employees. A business loan with a longer repayment period and lower interest rate is a better option.
4. Emergency funds.
A line of credit is a good buffer in tough times. But use it wisely; a credit line is no solution for extended cash crunches. Prolonged shortages call for a long-term strategy.
5. After repayment or paying down still have funds at your disposal.
Unlike a conventional loan, credit lines let you pay off the balance as you go and continue to borrow again when the need arises.
Getting to know Business Lines of Credit
Whether it is to meet unusual demands, improving your office space, or take care of any other short-term financial need, a line of credit is a good way to have extra funds available to your business when you need them. Just like a credit card, you only pay interest on the money you use.
Many business owners find that credit unions are much easier to deal with than a bank, even though they may use that bank for their personal accounts because they already have an established relationship. When seeking a line of credit, be prepared with financial documentation such as income statements and tax returns.
Lines of credit vary in how they are set up. For example, business lines of credit are typically asset-based, meaning hard assets are used as collateral. Such credit lines can also be based on receivables and in some cases inventory (although this is less common because the value of inventory can decline very quickly and is therefore seen as a greater risk to the lender). The interest rate can also differ because commercial rates may be equal to or exceed the prime lending rate (also based on the level of risk as perceived by the lender). Here at First Castle we look at your whole financial picture and do not require a pledge of security typically. A revolving line of credit can allow you to always have the funding available that you need and give you a little cushion.