Insights | Oberlander & Co

Getting a Business Line of Credit

Written by Jacob I. Oberlander, CPA | November 16, 2020

A line of credit offers quick access to liquid funds. In case the need arises for emergency access to cash, or if you need to invest in a big purchase, the knowledge that you have that available funds in your line of credit provides you with a level of assurance and peace of mind.

 

If your business is thriving and cash flow is healthy, it’s a great time to get a business line of credit. Why? The logic is simple. While your financial situation is good, it is very simple for a bank to approve you. Typically, there will be no cost involved. The banks don’t charge “closing fees” and you won’t be paying any interest if you’re not actually tapping into the funds. Keep in mind, that as long as you don't need the cash, don’t use it! Rather, be disciplined and save it for that rainy day or when an opportunity for growth arises.

 

The best option is to apply at your local bank. Chase is not recommended since they will pool your credit determination on your LOC with your credit cards. For example, if you have a Chase credit card with a limit of $50,000 and you get approved for $125,000 in credit, your LOC will actually be limited to $75,000.

 

If your local bank isn’t suitable, feel free to reach out to us, and we will guide you to a bank that can fit the needs of your business.