Operating Lines of Credit
If you have a business and you need to borrow money short-term, maybe for financing the salaries of your workers, or if you need to secure a fund for a short-term emergency reason, utilizing operating lines of credit would be the best way to go.
Should this be your first time hearing this term, don’t worry – you’re not alone. A lot of business newbies aren’t even aware that they can take this type of loan! So, what are operating lines of credit?
Definition of Operating Lines of Credit
In a nutshell, an operating line of credit is a type of loan that businesses can take to be able to bridge and close the gap to fulfill certain business obligations.
The principle of these operating lines of credit is to be able to assist businesses that are temporarily short of cash. You can consider and look at it as a financial “backup” for the time that you need funding or financing.
Details on How Operating Lines of Credit Work
From its term alone, an “operating line of credit” will only be applicable to businesses that are already functioning or operating. More often than not, financing institutions like banks would require at least two (2) years of business operations before they can get approved.
So, to summarize how these operating credit lines work, the business would apply and request an operating credit line. They would submit requirements and documents to the bank. Then, the bank would perform a background check and when it’s all positive, will draft up an agreement.
The business would think about the agreement and if it’s okay, they’ll sign and go with it. Otherwise, negotiations will happen. Then, the business would take out money from that pool of credits in question-based on the business needs. Finally, depending on the term and the rate, the business must return the principal amount with the interest rate to the bank. It could happen weekly, monthly, bi-monthly, annually – depending on the agreement.
To illustrate further, let us take on a more concrete example:
For instance, if a manufacturer is short on funds for the production of a particular product due to the fact of client late payment, then they can secure an operating line of credit. This credit or loan will then be used to continue and sustain operations or production.
It’s like a credit card but without actually a card.
When You Should Get an Operating Line of Credit
You can actually use operating lines of credit to your advantage. As a matter of fact, if you utilize it correctly, it can be the reason for the growth of your business.
But, here are a few situations you can consider to see if an operating line of credit is the type of loan that you need:
- If you need to purchase inventory
- If your company needs extra financial assistance
- If the budget for workers and employees is already falling short
In contrast, if you are looking to expand your business like purchasing land, acquiring a different company, and all those types of stuff, this isn’t what you need.
Looking back at the example above, the next manufacturing of products, thanks to the OLC, might be the break the company is looking for. Had the company not taken the loan, they might’ve been stuck to where they are now.
Benefits of Taking Out Operating Lines of Credit
If there are other types of loans that have longer terms, why should a business consider taking out an operating line of credit?
An operating line of credit is like a pool of funds from where you can make money from. So, you’d just take out what you need and pay for that respectively. Since you wouldn’t be handed the lump sum amount, you will have more control over the funds or the money that you will be given. You can pay for it depending on the agreement that you had with your financial institution. You can choose to pay for it daily, weekly, monthly, quarterly, and so on.
Repayment Without a Fixed Schedule
More Control Over the Funds/Money
An operating line of credit is like a pool of funds from where you can make money from. So, you’d just take out what you need and pay for that respectively.
Since you wouldn’t be handed the lump sum amount, you will have more control over the funds or the money that you will be given.
You can pay for it depending on the agreement that you had with your financial institution. You can choose to pay for it daily, weekly, monthly, quarterly, and so on.
Where to Get Operating Lines of Credit
Are you a business owner here in the state of Florida and you can’t find a better option than banks for your funding?
If yes – look no further! We here at Florida Commercial Real Estate Loan Group are considered to be the go-to company of small and micro businesses, manufacturers, real estate developers, and other businesses whenever they need funding.
As a part of our program, we offer operating lines of credits to businesses that need it. Compared to others, our program is a lot more considerate and efficient. When we say efficient, we mean that it’s a lot more work than what you would expect from a real estate commercial loan group company.
We can position our rates close to what banks offer, and we can give you an immediate solution to the financial crises that you are temporarily experiencing.
Why Are We the Best?
Florida Commercial Real Estate Loan Group is known to be the best when it comes to providing operating lines of credit because of the flexibility of our loans.
More so, we have many different offers and loans that you could absolutely take advantage of! We have warehouse loans, commercial & industrial (C&I) loans, $1 million unsecured loans, hotel, and motel loans, commercial real estate mortgages, and many more!
If you’re interested to find out how we can tailor a specific loan program for you, don’t think twice about giving us a call here at Florida Commercial Real Estate Loan Group!
We may not have the lowest interest rates, and we may not be able to approve your operating liens of credit in one (1) day, but what we can promise you is we’ll work with you to resolve all the financial problems your business has.
Dial us now or send us an email! We will send you a free sample computation for the operating lines of credit that you need!
We service all counties and cities throughout South Florida. However, if you need any of these services in other cities throughout the state of Florida, please contact us. See what services we offer below: