If you own a business in New Jersey, then you know full well how difficult it is to secure a fast business loan. This is why a business line of credit, New Jersey is an excellent and convenient source of funds for business owners. A business line of credit can cover the costs of emergency expenses, add to your reserve of working capital, and allow you to seize growth opportunities for your business.
Like other types of loans, applying for a business line of credit will come at a cost. It’s very important to assess the needs of your business and your current financial situation before applying for credit. That said, when shopping for a business line of credit, here are four factors you need to consider:
1. Loan Terms
How often does your lender require a payment? Knowing this is important. That’s why you need to fully understand the terms of your loan prior to signing on the dotted line. Some financial institutions require a pay-down provision (also called a clean-up requirement) where a business owner has to pay the balance within a short period of time, usually in regular monthly payments. Not every lender has this requirement, so if you think this feature is important to you, be sure to raise your concern about this early on.
When shopping for a business line of credit – or any type of loan – don’t forget to read the fine print on fees. There are lenders who charge an annual fee to keep your account open – even if you don’t use the funds. Others may deduct a transaction fee whenever you borrow from or repay your line of credit. You should also be notified if there are any opening or closing fees when setting up or closing your credit line. It’s important to be aware of these finer points before concluding your loan agreement.
3. Interest Rates
For a majority of borrowers, interest rates are the most important consideration they face when shopping for a loan. The interest begins to accumulate when you withdraw funds from your credit account. This is why you need to pay attention to the APR offered by potential lenders. The rates may vary depending on the lender, so be sure to take the time to compare rates and weigh your options carefully.
4. Amount of Funds
You should also consider the amount you plan to borrow from your line of credit. There are times when your business may benefit more from a different loan vehicle, such as a cash advance, a term loan, or a business credit card. For example, if you need to borrow a large sum of money and you don’t intend to pay it back quickly, a small business loan may be the better option.
Business Lines of Credit, New Jersey
When choosing the right loan for your business, take the time to assess the amount of money your business needs. If you want to discover how a business line of credit can be the ideal solution for you and your business, New Jersey, SMB Compass’ lending experts are the experts who can help you, and answer your questions.