Lets not bury the lede here: you don’t know what a line of credit is. You also didn’t know that there is more than one kind of line of credit.
That is okay, we’re here to break down the different kinds of lines of credit.
Line of Credit
When a financial institution, like with us, & one of our customers reach an agreement, we establish a maximum loan balance.
As long as the customer does not exceed the agreed upon amount, they are able to withdraw funds.
There are multiple advantages of opening a LOC. Perhaps the biggest reason, however, is the flexibility. The customer does not have to use all of the available funds, but it is there when needed.
What is a Revolving Account
An LOC is what is called a revolving account, where the cycle is virtually endless. The customer can take out funds, repay the amount borrowed, then borrow again from the same account.
However, in most cases, interest will be added to the unpaid amount on the account.
What are some examples of a revolving account? A credit card is the most common revolving account.
LOCs are what are considered unsecured. What does this mean? There is no collateral attached to them.
Contact Credit Experts at Matrix Business Capital
Need help further understanding all the information given? Contact the financial experts at Matrix Business Capital today to learn more.