Business Line of Credit

[EJ360Tech]

Hi - I am currently looking at taking out a business line of credit. I purchase computer equipment to resell, and when a client leases equipment I am required to front the money to my distributor, and then I receive my reimbursement from the leasing company about a week later. The LOC would be used solely for this purpose (nothing would be charged on it for more then a week or so), so no balance would ever go past 1 month.

My question is - how is interest computer on a LOC? For example, let's say the interest rate is 10% a month, and I let the money float for 1 week on the LOC, how do I estimate how much interest I will be paying for that week?

Also, when I asked Chase about doing a SECURED line of credit, they said that they still required a credit check and a look at my company's financials and last years tax return. Do all banks require this type of info on a SECURED line? Seems silly to me if I am the one providing the collateral for the loan, right?

Thanks.

- Eric

[Creditaddict]

What about an American Express Charge Card... Even if you charged on the last day of your billing period, you would have 20 days to pay it... never paying any interest.

Otherwise I would start looking at Credit Unions, you could get an overdraft account or an open ended credit line.

[EJ360Tech]

Thanks. I do currently have an AMEX charge, but unforuntaly my suppliers only take ViSA and MASTERCARD.

I have a Chase Visa Ink card that I pay off in full every month, but it has an $11,000 limit. Ideally if I could use that it would be great, as I get 1% back, and 1% of a $30K sale is $300 - easy money. I wonder if I could pre-pay my Chase Card in excess of $20K to increase the limit?

[Creditaddict]

How long have you had the Ink... They have a separate underwriting from personal cards... I would call in and talk to them about the kind of limit you need and how Chase is going to help you get that... maybe with some financials they would increase you.

[Anonymous]

I also have a Chase Ink and faced the same CL situation - my is $10k. What the underwriter told me to do is pay the card off multiply times each month for about 4 months. She said then call back and they will see that I have been paying the card off 2-3 times each month and they should have no problem doing a CLI.

For venders that take AmEx we use out Plum card. Love the 1.5% discount

[Red1Blue]

How old is your business? Do you have the duns file setup yet? You could try for KeyBank Business MasterCard. If you have good business credit you can get their card with out personal guarantee or pulling your personal credit. Call them and see what they say.

[Red1Blue]

You can also try for PNC Bank Card. They might pull your personal credit report but does not look for your personal tax returns and other things. I have their visa with CL of $15k.

[GregB]

One of my businesses is similar to yours. Since the distribution of name brand computer hardware & software basically consists of Ingram Micro and Tech Data, I assume those are your two main suppliers, right? Since the GP on those items is under 5%, no distributor is going to sell anything at a good price and take a CC. Those companies do offer leasing and then you would not be out the money.

Or, are you selling computer equipment bought from someone else?

On a separate subject:  I offered leasing until the mid 1990s. At that point I realized that any company that was leasing computer equipment was making other poor business decisions and was really struggling. ALL of my customers that leased computer systems in the 1980s & 1990s were out of business by 2000. I put my effort into the well run companies and things gradually became better. At least until the recent melt down, but that is a different reality.