Business Lines of Credit in Laguna Niguel

What are Business Lines of Credit?

Business Lines of Credit are like Home Equity Lines of Credit except that they are based on your business.  They use the businesses EIN number (which, for businesses, is exactly like your personal Social Security Number).  The line will have a limit (typically $100k for starters) and you can borrow up to that limit.  You only pay interest on the portion that you borrow and can pay it off at any time.  Business Lines of Credit use a business’ PAYDEX score (also called a D&B or Dunn and Bradstreet score) just as a personal loan uses your FICO score.

What types of Business Lines of Credit are there?

There are several types of Business Lines of Credit.  Some operate just like a credit card (often, you get an actual card).  Some operate like a checking account and give you checks to use.  Many give both a card and checks.  A few require you to use transfer forms to transfer the funds from your Business Line of Credit to your business checking account before you can use the funds.  Another common form of Business Credit is called a Trade Line.  This is a Line of Credit but only for that vendor’s products (similar to a store’s credit card).  Trade Lines are easier to get than regular Business Lines of Credit but are not nearly as flexible unless you purchase the majority of your product from that one vendor.

What are Business Lines of Credit good for?

Business Lines of Credit are best used for business expenses that will generate revenue.  Thus, if you need to manufacture or purchase your product for resale, a Business Line of Credit lets you make the purchase before you have the revenue from the sale of your items, thus breaking the viscous circle that many starting businesses face.  Business Lines of Credit are also good for businesses that have large swings in their revenue, helping to smooth out the cash flow of the business.

What should you watch out for?

Some “Business Credit Cards” are not Business Lines of Credit.  If the card application asks for your Social Security Number then it is a personal card.  It doesn’t matter that the card has the word “Business” on it.  If it is not using your IEN number and reporting to Dunn and Bradstreet, it is not a Business Card.  Also, some Business Credit doesn’t bother to report your payments to D&B (unless you are late or miss one).  While this isn’t terrible, it certainly doesn’t help you and it does have a slight negative impact on your PAYDEX score since it shows the Credit Line as available to you (a slight negative) without showing on time payments.

Some Business Lines of Credit ask for a personal guarantee.  This just means that if the business goes under, they can come after you for the remaining balance.  While it is preferable to get a Business Line of Credit that does not have a personal guarantee, most lines available to starting businesses will require it.  The good news is that several have a clause that allows you to remove the personal guarantee after a specific amount of time in which you have been a good credit customer (on time payments).

Also, if your business is in trouble and you are looking to Business Lines of Credit to save your business, they will likely just drive you deeper into debt.

Who am I?

I am Jeff Miller.  I have 15 years experience in the lending business, three years working with Business Lines of Credit and other Business Credit services.  I am in Laguna Niguel, California (south Orange County, about halfway between Los Angeles and San Diego).  You can reach me at (949) 249-3673.

I have access to several different types of Business Lines of Credit and other types of Business Credit.  I am available to discuss the options available to you by phone.  If you are in or near Laguna Niguel, we can meet face to face if that would help you.

Jeff Miller
Business Lines of Credit in Laguna Niguel

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