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Revolving line of credit for a startup business

H

High Water

New member
I'm working on a business plan for an idea I have and right now I am still paying off debt so I don't have a lot of funds to finance the business. I'm considering talking to a few banks about a revolving line of credit. If anyone has been through this I'd really appreciate some advice.

Some of my questions....

What kind of interest rate is a good one for something like this?
Would I be better off using a personal credit card?
Since it's for a business and its a start up are they going to require some kind of personal collateral?
What something like a business credit card instead?
Small bank, large bank or .....?
If I join a credit union do they typically give lines of credit to new members?
 
Go to bankrate.com to get an idea about interest rates.

Now as the the revolving line of credit, you have the advantage of only paying interest on the small amount you have loaned to you at any given time. The downside is the rate is likely to be a little higher than with a regular business loan. But... it might be easier for you to get a line of credit instead of a regular loan because you can opt for a low limit if you just need wiggle room to operate while you wait for invoices to be paid.

But remember, a line of credit is mainly to help you operate a business, float inventory costs and make payroll prior to invoice payment. Its not there to help you grow, that's what a business loan is for. If you're looking to buy equipment and such, a business loan would be the best option.

These are generalities, there are exceptions, but I hope this helps. Send me a PM if you have any questions with details you don't want to share publicly. I've been in business for quite some time, built it through thick and thin, have made mistakes and also some great decisions.
 
Aren't there specific business end credit cards you can get that are handled a bit differently? I could have sworn one of my friends got one of these. They allow you to have a higher "loan rate" in a sense because the idea is that you need the money to float a new business.
 
Tera said:
Aren't there specific business end credit cards you can get that are handled a bit differently? I could have sworn one of my friends got one of these. They allow you to have a higher "loan rate" in a sense because the idea is that you need the money to float a new business.
Click to expand...

This is what I thought but I think those are classified as business loans. They may just give you a physical card to make purchases easier rather than cash to your bank account.
 
I joined a credit union and I had to be a member one year before I could open a credit line with them. Some require you to wait, others allow you to do it right away.
 
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