Do you have some business projects lined up but you cannot estimate its total cost? Maybe you are planning to do some renovations or purchase new equipment, but you are afraid you might fall short of your budget. If that incoming order is way over your calculations, where will you get the funds? WeCompete Lenders has a solution for unpredictable expenses in the form of Locs or Lines of Credit. Alternative lending has provided businesses with several choices when they need money. There’s a merchant cash advance to fix cash flow problems, there’s asset-based loans that could utilize the most out of your assets, and there’s equipment financing if you need new machinery. There are many more alternative sources of capital. One of the lesser-used alternative loans is a line of credit.   What is a line of credit? A line of credit is a type of financing wherein a lender offers the client a maximum loan balance that the client can access anytime. The client can tap funds from the line of credit as long as it does not exceed the maximum amount agreed upon by both parties. Other requirements such as making timely payments and minimum monthly payments are needed to maintain the LOC. This is a very flexible alternative loan. Unlike most alternative loans, LOCs do not provide additional cash, so there is no surge in your finances. What LOCs give you is a lifeline for variable costs and unpredicted needs. LOCs work similarly to credit cards but they do not come with typical features such as reward programs, cash back, etc. Much like a credit card, it offers a certain amount of funds that you can use if and when you need it. LOCs come with interest which only accrues when cash has been drawn. The borrowed cash can be repaid immediately or follow a predetermined repayment schedule.   What do I get from a line of credit? Let’s delve deeper into how a line of credit works by analyzing its advantages over other loan options. Why should I get a line of credit if I can apply for other loans instead? Convenience - When your Line of Credit application has been approved, you can have access to funds whenever you need it. This set-up between you and the lender can last from 5-10 years. Additionally, you don’t receive cash which you could spend immediately, what you receive is a sure source of funds when you are short on finances. Control - Lines of credit give you control over your finances as opposed to loans that provide you with a lump sum. Although it has a limit, it is not very limiting - that means you can repeatedly borrow, provided you have not reached the maximum agreed upon amount. Much like a credit card, it resets when the balance is paid.   Financial flexibility - With a line of credit, you don’t have to worry about looking for funds when you need it.  There would be no growing debt to think about because lenders would only begin charging interest rates when you start using your LOC. If you and the lender agreed on a 5-year draw period, you can borrow and repay money as often as you want within that period, but you will need to make minimum payments every now and then. The line of credit ensures you have funds anytime you need it.   How do you compute for payments in an LOC? A line of credit is somehow a combination of a credit card and a small business loan.Computing for how much interest is accrued by the line of credit is a little different from credit cards or regular loans. However, it is quite easy. Lines of credit accrue interest once you begin drawing funds from the line. The interest rates are often charged annually, but you need to make minimum monthly payments to keep the line open. The minimum monthly payment is expressed as a percentage of the balance of the line. For example, if you have an outstanding balance of $12,000 and you and the lender agreed to a 1% minimum monthly payment, all you need to do is multiply $12,000 by 0.01. The answer is $120/ month. Try paying more than just the minimum amount every month. Extra monthly payments are automatically deducted from the principal amount of your loan which means you will pay less in the subsequent months.   How do I get a line of credit? There are two types of LOCs, the secured and unsecured. Secured LOCs are supported by collateral in the form of properties or invoices. Secured LOCs are recommended for borrowers that have bad credit records.Unsecured LOCs do not require collateral but borrowers must have good credit records and steady revenues.   Be prepared for cash flow crunches with a line of credit from WeCompete Lenders. Qualifying for our LOCs is easy. We send updated reports to business credit bureaus which helps build your business credit. With our low-interest rates, you pay only for what you use. Get the chance to draw out funds as soon as you need it. Contact us at (844) 516-0633 or at [email protected] for more information about lines of credit.