Search thousands of topics on CostHelper.com

BROWSE ALL TOPICS >> appliances babies & children  cars  consumer electronics health & personal care home & garden personal finance  pets  schools small business weddings
CostHelper > Small Business  > Business Line of Credit

Business Line of Credit Cost


How Much Does a Business Line of Credit Cost?

 
low costLow: Prime Rateaverage costMedium: Prime Plus 1.5-10 per cent
post E-mail post Post   Comments (1)
  Typical costs:
  • Interest rates vary, but generally range from 9-15 percent based on the length of time in business, your personal and business credit history and other factors. Most lines of credit have variable interest rates based on a number of factors. For businesses with no credit record or a poor one, theinterest rate may be tagged to the current prime rate[1] (which changes over time), plus an additional 1.5-10 percent, while a company with an extensive and positive credit history might be offered a line of credit at or even below the prime rate.
  • Missed payments on a line of credit can increase the interest rate to 24-30 percent or more.
  • Start-up or opening fees are generally $100-$250; or there's 1 percent Small Business Administration guarantee fee when opening a line of credit. A line of credit may have an annual fee of $100-$150, usually starting in the second year.
What should be included:
  • A business line of credit is a promise from the bank to loan you anywhere from $10,000-$100,000or more when you need it, within a certain period of time. You don't start making payments or paying interest until you draw the money out; you only pay on the actual amount loaned, not the maximum possible; and if you pay back some of what you owe, you can borrow it again, up to your credit limit. IdeaCafe.com[2] covers the basics.
  • The difference between a line of credit and a traditional small business loan is that you don't make payments until you tap into the money, and you can keep drawing out more money as you need it, as long as you don't exceed the maximum limit. A line of credit is usually easier to get and has a higher interest rate than a standard business loan, but lower interest rates than a business credit card. SFGate.com gives an overview.
  • Lines of credit can be unsecured or secured. An unsecured line of credit usually has a lower credit limit and higher interest rates. A secured line of credit is based on collateral such as the company's accounts receivable or inventory; credit limits can be up to 10 times higher for a secured line of credit over an unsecured one, and interest rates are usually lower. AllBusiness.com gives five reasons for opening a business line of credit[3] and the advantages of a secured line of credit[4] .
Additional costs:
  • Late payment fees can run $15-75 or more<; penalties for going over the maximum amount can be $30-$50.
Shopping for a business line of credit:
  • Get free, confidential advice on lines of credit and other financing from a business expert through the nonprofit SCORE.org[5] .
  • Generally a company needs to have been in business at least two years old to qualify for a line of credit, and have good credit established through its bank accounts, with its suppliers and with a business credit card. Check with your current bank to see what line of credit terms they offer.
  • Terms and interest rates can vary a great deal on lines of credit, so compare several options. Business lines of credit are available from a number of banks and other sources, including American Express, Capital One[6] , VISA[7] and LendingTree.com
post E-mail post Post   Comments (1)
CostHelper News


7 Lesser-Known Discounts for the 50+ Crowd
As they age, members of the Baby Boomer generation don't like to admit that they're senior citizens, but they love getting discounts. It's kind of a quandary, because some of the best deals available are reduced prices for older folks. || Posted October 21 2013


Our Top 10 Favorite Secret Menu Items
Don't believe everything you read. Those menus posted at your favorite fast food spot or coffee stand are not the be all and end all of their offerings. || Posted October 25 2013

‣ All CostHelper Blog Posts


What People Are Paying - Recent Comments
Business Line of Credit from Bank of America
Amount: $100.00 per year
Posted by: HeadHunter in Southampton, NY.Posted: February 1st, 2012 08:02AM
Company: Bank of AmericaInterest Rate: 4.25
My annual fee has been $100.00 for the last five years for a $50,000 credit line
BofA just sent me a letter keeping the interest rate @ 4.25 but increasing the annual fee to $500.00.
This makes the line un-economical for my limited usage.
Was this post helpful to you?   yes     no Report prohibited or spam


 

Comment On Your Experience With a Business Line of Credit
 
Subject:  *
Amount Spent:  * per year
Company: Interest Rate: 
Comments: 
Purchased:  Year: 
City:  * State:  *
 
Information about you:
Email:  * Email addresses are not displayed.
Name:  This is the name we'll display with your post.
me on this computer
*=required field.
 



External Resources:
  1.  www.moneycafe.com/library/primerate.htm
  2.  www.businessownersideacafe.com/financing/credit_line.php
  3.  www.allbusiness.com/business-finance/business-loans-business-credit/3540-1.html
  4.  www.allbusiness.com/business-finance/business-loans/11198-1.html
  5.  www.score.org/
  6.  www.capitalone.com/small-business/?linkid=WWW_Z_Z_Z_LCFAQ_H2_04_T_LCDISC
  7.  usa.visa.com/business/cards/line_of_credit.html?ep=a_cpc_google_business+line+of+credit
More Small Business Topics
Check Out All Costs for Small Business How Much Does a Motivational or Keynote Speaker Cost? How Much Does Payroll Service Cost? How Much Does a Point of Sale System Cost?

Search Thousands of Topics on CostHelper.com

 


Today's Featured Cost Articles

About CostHelper
CostHelper is based in Silicon Valley and provides consumers with unbiased price information about thousands of goods and services. Our writers are experienced journalists who adhere to our strict editorial ethics policy.

CostHelper Community
Angiogram of heart
Paid: 55150.00
Had this procedure done to check heart due to abnormal stress test. Did not need any stents or any other procedure as everything was negative... [more]
-Pamela Garrett
Angiogram Cost
HELP: asbestos in furance - many questions
Paid: 0.00
I am renting out my home in Grand Rapids, MI and have received a notice from the city that the home must be inspected... [more]
-Busa
Asbestos Removal Cost
Belly
Paid: 45.00
The clamp was annoying so it took away concentration of the tiny sting of the needle. I had just turned 15 at the the time and I've had it for almost a year and it has healed fast and never given me any trouble... [more]
-Madi
Body Piercings Cost
Duckwork
Paid: 3009.00
Single family home... [more]
-Lfdykes
Ductwork Cost
2 half shafts replaced
Paid: 140.00
Bought the axles myself on ebay for 40 each, then had a mobile mechanic come to my house to do the work. It is not a hard job, but has a couple tricky parts for a subaru. Easier for a honda or toyota... [more]
-Subbie Giy
Replacing a CV Boot Cost
Even with insurance looking at going broke
Paid: 55000.00
Recently on a camping vacation my 11 year old became very sick. Took him to the closest hospital. Found out he is type 1 diabetic. Was very sick and had to be flown from Rock Springs WY, to Salt Lake City, UT. 185 mile on the ground... [more]
-Broke and confused.
Air Ambulance Cost