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.
Related articles: Business Credit Card, Mutual Fund, Stock Broker

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


Forgotten Expenses In a Home Addition Budget
Items like construction costs, permit fees or debris removal aren't the only expenses to consider when calculating the total costs of a home remodeling project. || Posted August 5 2013


7 Ways to Stretch Your Reduced Food Budget
End of the year budgets are tight for everyone, especially in this economy.It's especially hard for the millions of Americans who depend on government programs like food stamps to help make ends meet. || Posted November 11 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
Brake repair
Paid: 348.00
I first priced new brake pads and shoes at the register. Then told them to do the job... [more]
-rickdg
Tune-up Cost
Walgreens in North TX
Paid: 31.99
Much less painful and less costly than influenza!... [more]
-Tex Girl
Flu Shot Cost
tune up
Paid: 375.00
Is this normal? I paid $375... [more]
-kelly freeman
Tune-up Cost
Not ready for another baby yet!
Paid: 50.00
I am 24 yrs old and I already have a 6yr old little girl. Im not ready for another baby right now for sure!! I have unprotected sex with my fiancé last night and we just wanted to make sure... [more]
-Fiancé's Passion Needs Relaxin'!
Morning After Pill Cost
Pressure Washing
Paid: 85.00
This lady was so polite and detailed. She pressure washed my driveway, walkway and sidewalk all for $85.00. She also done my neighbor house... [more]
-Miss.Adams
Pressure Washing Cost
garbage disposal and install
Paid: 265.00
I feel I got ripped off. Guy was here 20 minutes took out the old one and replaced with a new one with no brand name that can see. He didn't even break down the charges on the bill. Just a flat 265.00.... [more]
-#sucker
Garbage Disposal Cost