What Is A Revolving Line Of Credit? - YouTube

Welcome back and thanks for joining. Today, we're going to talk about

revolving lines of credit. What it is? The benefits, some of the features and at the

end, I have a warning that you should know.

So, what is a revolving line of credit? Just going to try and break this down and

keep it really simple. What a revolving line of credit is very simple. If you get

approved for let's just say a hundred thousand dollars to use even numbers. And

you borrow $10,000. Now, you have $90,000 remaining. A

great thing about a credit line is if you pay that $10,000 back,

now you have a full $100,000 dollars remaining again. So basically, a

credit line, it works very similar to a credit card. You get approved for a set

amount of money, as you use that money, you have less available. As your repay it,

the original amount is available again. Or whatever amount you paid back becomes

available. So very simply, in a nutshell, you can draw, repay it and then repeat

that process all over again. So as you pull money and draw down on your credit

line, as you repay it back that money becomes available again. As you continue

to keep pulling, the less and less amount of money that you have available. So some

of the benefits of that are (1) you only pay for what you use. Which is great. If

you get approved for a hundred thousand dollars, you might not need all that

money. That's okay. You only pay for what you use. So if you're going to prove for a

hundred thousand and you only use 10,000, with most lines, you're only

going to pay on that $10,000. So, it's a great thing to have for your

business and really gives you the flexibility to

use money when you need it. If an opportunity arises, you can pull that

money on demand and go take advantage of that opportunity. If an

issue pops up in your business or an unexpected challenge, maybe you're

supposed to get paid for a few jobs and that wound up getting delayed and

payrolls on Friday, you can pull from that line, pay your payroll and you pay

me a job next week and it's okay. So some important features is every lender has

different guidelines for their credit lines. Some cap out the dollar amount.

Meaning, they only do credit lines of 50,000, a hundred thousand, 200,000

and so on. Really getting with the right lender that can

meet the needs of how much money you're looking for. The size of a line is going to

be super important. Every lenders have different rates. And usually depending on

a number of things about you and your business will make up the rate and the

cost. Some lenders collect payments back on a monthly basis. Some going to weekly

basis, some bi-weekly basis. So you know, understanding what the terms

are and how the collection process worked is really good question to ask

them. Something that's super important to know. Some lenders only work with certain

industries so they're not waste time. You really want to make sure that whoever

you're working with, will be able to work with your industry. Otherwise you're just

wasting time we're going to apply for absolutely no reason. And every lender

again has different interest rates. So it's really important to know and what

the rate is and make sure it makes sense for your opportunity. Some other feature

that you're going to want to check are some charge interest on a daily basis. Some

charge of interest on a monthly basis. Meaning if you pulled $10,000

from your line and only had it out for 10 days, some lenders will

charge you interest for those to that 10 day period. Some lenders will charge

you for a whole 30-day period. So even if you only pulled it and use it

for 10 days and repaid it back, you might be charged interest for a full 30-day

period. So it's definitely something you want to ask and depending on how you're

going to use, the line that may make a difference or not. If you plan on using

it and paying back constantly, that could one-two turning into a pretty big

unexpected expense. So it's definitely a good question to ask. So how and where to

get a revolving line of credit? There are a number of different options out there.

Some lenders or quality inquire that you have real estate as collateral. There are

many options where you don't need real estate as collateral which is great.

There's a lot of business owners may not have real estate collateral that they

want to use. So it's important to know that upfront, so you don't waste time. But

typically what we would do with the client that comes to us we would have an

upfront conversation. Go through a few simple questions. Really understand their

needs, what they're looking to get accomplished by using a revolving line

of credit. And then from there, we have a very simple one-page digital application

that we would send out to our customer to complete. And then usually we're going to

look at the last 3 to 6 months of cash flow. Usually via your bank

statements. The lines bigger 150 to 200

thousand. We may ask for some recent financials. And maybe a tax return. There

are products out there that don't require a tax return at all or any

financials, which is great. There are some revolving lines of credit that are out

there that work with challenged credit. And there are some great products out

there, they're betting very beneficial with people with excellent credit. So you

really want to make sure that you're working with someone has the capability

to offer a number of different revolving

credit line products and options across a number of different lenders to ensure

that you're going to get the best provable for you and your business and your

credit criteria. So as mentioned earlier, one of the warnings that I have is you

know, you want to really make sure that you don't over borrow. So sometimes

when you come across maybe an opportunity or even a challenge in your

business, you might not be exactly sure how much you're going to need. If it's a

challenge, it might be a temporary one but you're not sure how long that's

going to last. So determining how much money you need. You might just not know. You

also might be going into a renovation and think that you only need or think

you might need 100,000. You only wind up needing 50,000. So

it's really important you don't want to over borrow. So sometimes when you do a

term loan or a small business loan, you have to borrow a set fixed amount of

money up front and then you're responsible to pay that money back and

the interest back. I mean even if you pay it back early and get maybe an early

payment discount or didn't have to pay back the total amount, you still were

paying interest on that initial amount of money that you took out. So the

benefit of having a revolving credit line is that you only pull what is

necessary and you only pay for what you use. And another great thing is you

really want to make sure that you have a credit line that can grow with your

business. As your business grows, you're definitely going to want to work with

the lender that can grow that line with you. And as your business grows usually

you wind up need with you know more running to grow up. So it's really

important that you're partnering with the right lender that can help that grow

with you. If you'd like for help or have further questions about revolving lines

of credit, please check out the link below. And we're more than happy to help

you. I really appreciate you watching my video and please subscribe and I look

forward to seeing you again. Thank you.