Here are some tips on how a secured line of credit could work for your business. One of the biggest challenges that businesses face is managing their cash flow. Whether you're waiting on your customers to pay invoices, in need of purchasing equipment, experiencing a period of unexpected growth or demand, or expanding your business or inventory, there are often times when you need money you don't have on hand to catapult your company to the next level.
You've likely used loans or credit cards to get you through periods where cash flow has been tight or when you're making a big investment in your growth.
Have you ever wondered if you were using the right credit products for your business needs? If you've not considered a real estate secured line of credit, you might benefit from learning more about how its flexibility and low interest rates could work for you. A line of credit is a revolving credit vehicle like a credit card that comes with a maximum credit limit and can be borrowed and repaid up to that limit repeatedly. Lines of credit tend to come with low interest rates when compared to credit cards.
A secured line of credit is when you offer an asset as collateral. This could be an owned asset or property like your home, commercial building or farm. There is a higher risk for the customer with secured lines of credit - if you're unable to pay back the amount borrowed the bank could seize your asset to get its money back.
An unsecured line of credit has no collateral attached and does not pose the risk of tying the line of credit to a specific asset, it tends to come with a slightly higher interest rate for that reason. When applying for a line of credit, let your advisor know that you are a homeowner or a commercial property owner and are willing to offer a property you already own as collateral.
When you sign the paperwork for the secured line of credit, you will also need to sign over documents authorizing the use of your property as collateral.
In some instances you may still do this if you have a mortgage loan on the property, if you have built up equity in your property and meet other criteria. Please note, not all mortgage loans provide you the flexibility to use the equity built in your property.
Discuss with your advisor your options to setup a global limit to use the equity for current and future business needs. An Educators lending specialist will have the answers to all your borrowing questions, and can help you decide the best way for you to get the money you need. Looking to renovate? Refinance your mortgage? In this upcoming panel discussion, learn how to navigate the current climate of lines of credit , refinancing , and mortgage renewals. Reserve Your Spot Now. Skipped to content anchor The Learning Centre Where would you like to start?
Categories Filter posts. The Learning Centre: Borrowing Know the difference: secured vs. A Secured Line of Credit allows you to borrow up as much as you need, at any time, up to a certain amount - unlike an installment loan which is for a specific dollar amount.
As you repay your outstanding balance, the amount of available credit is replenished, meaning you can borrow against it again and again. With this type of loan, you only pay interest on the amount you use. Because you pledge your FNB Savings Account or Certificate of Deposit as collateral for the loan 2 , we can generally offer higher limits and a lower rate than other forms of borrowing. FNB uses credit score, employment history, monthly debt payments and income among other factors when considering whether or not to approve your application.
Our objective is to make the borrowing process simple and straightforward. To apply for a Secured Line of Credit, you will want to have the following information available for your branch visit :.
While you won't need this for your initial visit to start the application process, as we evaluate your application, we may ask you for additional pieces of information.
You may be asked:. Compare all accounts. This comparison chart makes it easy to compare all of our borrowing options. Still not sure? Answer a few quick questions to help you find the right borrowing option. Read this post in Spanish. Image: Mother reading to her toddler daughter in bed. Advertiser Disclosure We think it's important for you to understand how we make money.
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