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Some, but not all, banks charge a monthly maintenance fee if you do not use the line of
credit, and interest is charged as soon as money is borrowed.
Most often, the terms of the line of credit are usually annual, with an interest rate
based on the prime rate plus one to three percent. Line of credit payments usually are
interest-only on the amount borrowed, but banks expect that line of credit to be paid
off completely during the year.
Make sure to apply for a line of credit while you are in a comfortable financial position
in order to qualify for the credit. Don't wait until you desperately need money before
applying!
Because a line of credit can be borrowed against and repaid on an unscheduled basis,
some veterinarians might find the interest calculations more complicated. And that
might result in them being surprised at the amount they end up paying in interest if
they do not repay the principle promptly.
While a line of credit can smooth out a rough patch in income until your business is
producing strongly again, note that a line of credit should not be used to rescue a
practice that is experiencing a serious ongoing financial crisis. A line of credit should be
used as a tool to use while waiting for your accounts receivable to be paid.
Lines of credit are meant to be used, paid off quickly, then used again when necessary.
Most veterinarians or vet
practices have a line of
credit established with
a bank. This is often
used to meet financial
obligations during the
low-income months
of the year, which is
common due to the
seasonality of equine
veterinary business.
Covetrus offers a range of
solutions that will better
position your business to
discover valuable ways to
accelerate growth and save
money. Our experts will
work with you to provide
strategies that will help you
achieve your business goals
and create avenues for
continued financial success.
https://equimanagement.com/articles/how-to-use-a-line-of-credit Source:
Using a line of credit
