Line Of Credit, Do you have one?

Discussion in 'Business Operations' started by BSDeality, Aug 25, 2006.

  1. BSDeality

    BSDeality LawnSite Silver Member
    Posts: 2,850

    This question is more geared towards "small" operations.

    Who has a line of credit, and if so, how much is it for? This season has been going great (one exception) and it never crossed my mind to get one until my banker asked me if I would be interested in it. Thinking back to that one incident it occurred to me that things could have been a lot easier for those 3-4 days. It was about a month after starting up again for the season and I had run my bank balance quite low because I purchased another truck. It was at the point to where I had to do some labor-only jobs to generate some quick cash flow. This could have been so easily avoided with even a small LOC of a few thousand. Last week I applied for a $15,000 LOC and got my approval yesterday. This isn't something I plan on ever using, but every once in a while those situations come along where you need to replace a machine on the spot or just plain let the AR slip too long and you've got bills to pay too.

    The LOC of free to have other than a $200 closing cost. Interest is prime plus 2, which isn't the greatest, but then again I would never use this for a long term loan only perhaps for a machine purchase where I could pay it back in 3-6 months.

    Do you have one?
    Have you used it?
    If so, for what?
     
  2. rodfather

    rodfather LawnSite Fanatic
    Posts: 9,501

    I have one Matt, have used it a number of times for large purchases like trucks and mowers so as not to drain my business banking fund too low. Goes up to 75K...prime plus a couple of % points as well.

    Works great for us btw.
     
  3. Charles

    Charles Moderator Staff Member
    Posts: 7,949

    I always keep a home equity line--prime + 1%
     
  4. rodfather

    rodfather LawnSite Fanatic
    Posts: 9,501

    you mix that with your business? strange IMO...
     
  5. BSDeality

    BSDeality LawnSite Silver Member
    Posts: 2,850

    If I had a home, I would have a HEL too. LOL
     
  6. rodfather

    rodfather LawnSite Fanatic
    Posts: 9,501

    but then the interest expense is not deductable from the business
     
  7. BSDeality

    BSDeality LawnSite Silver Member
    Posts: 2,850

    I know Rod, I would use it for toys ;). Got my eye on a nice little 38' boat and another couple snowmobiles
     
  8. troy03

    troy03 LawnSite Member
    Posts: 59

    Ive got one for my business. Its just like a high limit credit card. Its worked great so far, put a dump trailer and a bed edger on it. Just call up the officer, and the moneys in my account within a day usually.
     
  9. Charles

    Charles Moderator Staff Member
    Posts: 7,949

    It is tax deductable though
     
  10. rodfather

    rodfather LawnSite Fanatic
    Posts: 9,501

    from your personal charles, not your business unless you are combining your business $$$ acquired with another occupation...my brother is a cpa and owns many Jackson/Hewit Tax Preparation franchises and I have been in this a very long time...I know the laws and I know how to separate things, believe me.

    perhaps you may not
     

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