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FelicianaTigerfan
LSU Fan
Baton Rouge
Member since Aug 2009
13641 posts

Getting a line of credit at a bank @ 6.7%


50k line of credit to buy equipment to start a business at the above posted interest rate. Interest payment each month on money spent is the only monthly obligation.

Should I shop around for a better rate?

Anything I Gould be weary of?

First time doing something like this and kinda going in blind.







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mglsu21
LSU Fan
Prairieville
Member since Jun 2012
455 posts

re: Getting a line of credit at a bank @ 6.7%


Fixed rate or variable? If fixed then 6.7% interest only is pretty strong for a start up business IMO. Maybe someone else knows of a better rate/place but seems good to me.

Also is this an open-ended line or does it close after ____ years? If it closes after ____ years then find out what happens if you still owe a balance at that time.






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fishfighter
LSU Fan
Baton Rouge
Member since Apr 2008
16433 posts

re: Getting a line of credit at a bank @ 6.7%


quote:

Also is this an open-ended line or does it close after ____ years? If it closes after ____ years then find out what happens if you still owe a balance at that time.



This for sure. The rate you have is good if you didn't have to put up the kids.






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rmc
LSU Fan
Zachary, LA
Member since Sep 2004
22407 posts

re: Getting a line of credit at a bank @ 6.7%


quote:

Getting a line of credit at a bank @ 6.7%


Secured? If not, thats pretty damn good.

eta: if it is secured, I would say its still pretty good.



This post was edited on 6/20 at 10:17 am


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Ranger198
LSU Fan
Member since Oct 2012
673 posts

re: Getting a line of credit at a bank @ 6.7%


Good rate. Also is this fixed?
Good luck with your business.






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mglsu21
LSU Fan
Prairieville
Member since Jun 2012
455 posts

re: Getting a line of credit at a bank @ 6.7%


Yeah I forgot to ask if secured or unsecured. Good either way but great if unsecured.





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Ranger198
LSU Fan
Member since Oct 2012
673 posts

re: Getting a line of credit at a bank @ 6.7%


quote:

Yeah I forgot to ask if secured or unsecured. Good either way but great if unsecured.


This if unsecured and fixed I would do it.






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FelicianaTigerfan
LSU Fan
Baton Rouge
Member since Aug 2009
13641 posts

re: Getting a line of credit at a bank @ 6.7%


Talking with the banker is all foreign language to me but if I understand correctly the credit is there as long as I need it. He mentioned 25-30 years as long as I keep meeting my monthly interest obligation. Interest rate won't move as far as I understand it also.

Hopefully will only need about 35k of it and plan to operate the business the first year without pocketing any profits and putting everything towards principal and hopefully be a debt free business within 2 years.






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TROLA
LSU Fan
BATON ROUGE
Member since Apr 2004
5920 posts

re: Getting a line of credit at a bank @ 6.7%


That's not neccesarily a bad rate but its probably not fixed as the vast majority of LOC's are variable in my experience.. Make sure to fully understand the rate process if its variable and the whether or not the loc can be called due.. You don't neccesarily need to understand all the ends and outs but cover your arse and ask questions when you don't understand.





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Im4datigers
LSU Fan
Northern Virginia
Member since Oct 2003
3055 posts

re: Getting a line of credit at a bank @ 6.7%


quote:

He mentioned 25-30 years as long as I keep meeting my monthly interest obligation. Interest rate won't move as far as I understand it also.


This doesn't sound right. Plus a line of credit for a start up business to purchase equipment typically doesn't exist. You better make damn sure he's not expecting to take a 2nd mortgage on your house. This is what it sounds like to me.

A typical equipment loan is going to be a closed ended term loan for typically 4-5 years, financing 75/80% of the cost and termed out. Every time you buy a new piece of equipment it's a new term loan.

A line of credit to purchase equipment would never make it past underwriting as you'd never pay the loan back making interest only payments. Your equipment would be outdated and/or broken, you'd still have a line balance, and then you would need to borrow more money to buy more equipment while you haven't paid for the first equipment purchase yet.

Only the big boys have equipment "guidance lines" at banks. Unless it is just one shitty bank you are talking to.

I'd proceed with caution






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Broke
LSU Fan
AKA Buttercup
Member since Sep 2006
54553 posts

re: Getting a line of credit at a bank @ 6.7%


This isn't adding up for me. Also what kind of business? I can tell you if it would work here.





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