re: Getting a line of credit at a bank @ 6.7% (Posted on 6/20/13 at 9:03 pm to mglsu21)
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.
TROLA LSU Fan BATON ROUGE Member since Apr 2004 6669 posts
re: Getting a line of credit at a bank @ 6.7% (Posted on 6/20/13 at 9:41 pm to FelicianaTigerfan)
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.
Im4datigers LSU Fan Northern Virginia Member since Oct 2003 3075 posts
re: Getting a line of credit at a bank @ 6.7% (Posted on 6/21/13 at 10:35 am to TROLA)
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 Your equipment would be outdated and/or broken, you'd still have a line balance, and then you would need to borrow more money to buy more equipment while you haven't paid for the first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.