Business loan vs. line of credit

Discussion in 'Business Operations' started by POPO4995, Jan 4, 2013.

  1. POPO4995

    POPO4995 LawnSite Bronze Member
    Posts: 1,206

    I want to do some debt consolidation and wondering what avenue would be the best to go down, business loan or business line of credit? Another question I have is can you consolidate vehicle loans into either or do you have to keep them seperate? Any insight to either one or both would be appreciated. I'm going to start calling banks to talk to them but I figured this would be a good place to start! Thanks for any input guys!
     
  2. ToddH

    ToddH LawnSite Silver Member
    Posts: 2,184

    First of all it kind of depends on the loan but most of the time consolidation is allowed. Problem is getting the loan from a bank.

    If you are serious about this I strongly suggest you got to the score office and get their run around on a business plan then get an introduction to a specialty banker that does SBA loans. If you have any questions go to the SBA website.
     
  3. wbw

    wbw LawnSite Fanatic
    Posts: 5,424

    My limited experience has been that the banks like to keep your vehicle loans seperate.
     
  4. ToddH

    ToddH LawnSite Silver Member
    Posts: 2,184

    WBW, I agree that it is easier for them to track the asset/loan but not a deal killer if you have good credit.
    You can also look at fleet lending/leasing.


    There are also advantages to the buyer to keep them seperate as well.
     
  5. snomaha

    snomaha LawnSite Senior Member
    from midwest
    Posts: 871

    Line of credit is used as a bridge during busy times - large payrolls due to the busy season but you haven't collected A/R yet would be an example. Banks like to see a loc at a zero balance at least once a year.

    If you have enough equity in the vehicles and good credit it should be no problem to consolidate.
     
  6. Efficiency

    Efficiency LawnSite Bronze Member
    from zone 6
    Posts: 1,536

    Vehicles dont belong on LOC. won't ever be able to get a bank to do that deal. Doubt you will find a bank to consolidate your debt.
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  7. djagusch

    djagusch LawnSite Platinum Member
    from MN
    Posts: 4,202

    Under a buisness loan if he has enough assets they could consolidate the debt, even vehicles. Just need enough assets for them to hold. I've done this in the past and may do it in the future. The key thing is to build relationships with bankers over the years.
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    Last edited: Jan 5, 2013
  8. djagusch

    djagusch LawnSite Platinum Member
    from MN
    Posts: 4,202

    Also why not a vehicle on a loc? I would think they wouldn't have a issue if you are planning of paying it off 6 months or less.
    Posted via Mobile Device
     
  9. wbw

    wbw LawnSite Fanatic
    Posts: 5,424

    Back in the days when I had a large enough line of credt to purchase vehicles with it my banker always wanted to do separate loans for them. It is almost like the vehicle loans don't count since they are secured. I have always used unsecured lines of credit and of course banks like secured loans.
    Posted via Mobile Device
     
  10. ToddH

    ToddH LawnSite Silver Member
    Posts: 2,184

    I could be wrong but Efficiency said vehicles do not belong on an LOC which is to say they can not be put there directly or indirectly.

    Bottom line is borrowing is hard these days and getting credit when you need to "consolidate" is tough unless you have other real assets and the old mower or truck is not going to get it from a "bank".
     

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