Any one use a line of credit??

Discussion in 'Business Operations' started by KenH, Dec 3, 2002.

  1. KenH

    KenH LawnSite Bronze Member
    from CT
    Posts: 1,622

    I just opened a line of credit at my local bank. I pay interest only on what I borrow, and dont have to pay on principal until the end of the term. Works just like a home equity line. Has anyone else done this??? Seems like a viable option for positive cash flow.
     
  2. Highpoint

    Highpoint LawnSite Member
    Posts: 153

    the KEY to this is "payable at end of term" If you fail to pay on the principle you'll get stuck with a LUMP sum due. Be Careful. This can get you into trouble. Been there, done that, don't do no more.:dizzy:
     
  3. KenH

    KenH LawnSite Bronze Member
    from CT
    Posts: 1,622

    I understand that...Ill just pay towards principle as I go along. I am pretty good with my finances. Interest rates are at an all time low.....
     
  4. Mowingman

    Mowingman LawnSite Platinum Member
    from Texas
    Posts: 4,666

    When I went fulltime 3 years ago, I got a line-of-credit set up with my bank. It has come in real handy to meet payroll early in the spring when cashflow is a little slow to get started. Also has been handy when I need some equip. on short notice and won't have cash on hand till later in the month. I have found this type of "loan" to be very economical in the long run.:D
     
  5. John Allin

    John Allin LawnSite Bronze Member
    Posts: 1,489

    We have several.
     
  6. KLR

    KLR LawnSite Member
    from Zone 6
    Posts: 171

    yes, we also have a couple. makes good sence as long as you use them wisely (you know, no impulse spending, that sorta thing)
     
  7. dr grass

    dr grass Banned
    Posts: 242

    credit is EVERYTHING in todays economy. i have credit established with my name. since i just changed my business name recently, i dont have any under the business yet. i have been saving credit card apps. for a few months now. soon, i will go through them, and see whatkinda deals i can get. than, ill order a card or 2 under my companys name.


    shep :)
     
  8. Nebraska

    Nebraska LawnSite Senior Member
    Posts: 525

    Absolutely a viable option for cash flow. Was included as part of our initial business plan....
    Have only used it once, during the winter (January) when we had very little snow.... Was able to pay it back the following late spring (May)... It was not till after the annual renewal that we were able to pay it back that year and the bank just rolled the principle over into the new term.
     
  9. Barkleymut

    Barkleymut LawnSite Bronze Member
    Posts: 1,117

    Be aware that a line of credit usually has a variable interest rate. We were about to buy a new truck, trailer, and ZTR on a home equity line but will wait till we get a couple of signatures on contracts for next year. BTW it doesn't look like the Prime Rate will increase anytime soon but who knows whats to come in 5-10 years. I sure would hate to pay 10% or more.
     

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