Hey guys Sean Mory here with another session of LenCred Credit Geeks Q&A.
Joined today again by a special guest our founder and CEO Tom Gazaway, as well as Dustin Weitzell one of our Advisors. Today’s question comes from Julie out of California. Tom, Julie asks, ” What is a revolving line of credit for business?” I want to piggy back Julie’s question if she does not mind Tom. Really for me I think the better question is what is the major difference between a loan and a revolving line of credit? Great questions and so we appreciate your questions by the way. Most people just think I just want to get a small business loan because I need to finance my business. But there are additional loans you got your lines of credit, your revolving lines of credit. A revolving line of credit is one you can use and carry a balance and then pay portions of it and then use again. So you can revolve the balance, which is were that kind of comes from. Different then a loan right?
Absolutely. One of biggest things for our clients that come through as a startup is a lot of times they do not realize that if they look for $150,000 and maybe they can only get a $50,000 line of credit that is revolving. It opens the door for them to maybe have a lower payment during the time. As they pay that it goes back into their pool of money to use over and over again. In essence maybe they have a smaller payment and still have that $50,000 equal to $200,000 over a year and a half. Because they are budgeting for two years out or three years out.
The revolving lines of credit are great. They are a little harder to get, you know, sometimes they are tough to get. When you are starting up if you have that option then it is always good. Again you do not have a monthly payment till you use the money. Where as with a loan you will have the entire monthly payment due right at the beginning whether you use all the money or not. Another great question. Wonderful. Thank you.
Alright guys, again question answered by our CEO and Founder Tom. Thank you for your time, I hope that answers your question Julie from California. Please feel free to reach out to us at www.lencred.com, we will do whatever we can to help.