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FAQs on Business Line of Credit in Australia

 


When in cash flow urgency, business owners resort to multiple financing options to replenish the funds and minimize the cash flow gap. There are different types of business financing options you can choose from, depending on your cash flow needs, business objectives, and urgency. On that note, this blog will answer some of the frequently asked questions about a business line of credit in Australia, which is a common financing option for small business owners.

 

1. What is a Business Line of Credit?

A business line of credit is like credit for business owners that have a line of credit offered by the lender. The borrower can use the funds within the set limit for development purposes, supplier payments, or anything else related to the business. It is beneficial for businesses struggling to manage their cash flow deficits. The credit line ensures business continuity and offers easy access to cash in emergencies.   

 

2. How Does a Business Line of Credit Work?

Once you apply for the line of credit, the lender will assess your business and financial status, considering the same to set up a credit limit. The business line of credit allows you to draw funds within the limit at any time, within that limit. Once you repay the money, you can draw funds again, like on a credit card. You don't need to use the entire credit limit. You can use whatever amount you need to pay interest for only that. A business line of credit is an ongoing business financing solution. 

 

3. What are the Advantages of a Business Line of Credit?

It’s the benefits that draw borrowers towards the business line of credit. Let’s find out how you can benefit from it. 

  • You don’t have to pay interest for the credit limit but only the funds that you are using for business purposes. 
  • There is flexibility in terms of funds access. 
  • There is no need for collateral or security up to a certain limit. 
  • It does not charge you an early payment penalty. 
  • You can pay off when you no longer need the funds. 
  • The business line of credit is available for a term of up to 5 years.  

 

5. What Documents Do You Need to Apply for a Business Line of Credit?

Depending on the lender or the finance broker that’s facilitating your business line of credit, here’s a list of documents. 

Under Low Documentation

  • Bank statements for the last six months
  • Valid ID proof
  • Proof of active ABN

Under Full Documentation 

  • Financial statements and documents
  • Proof of property ownership
  • ATO statement
  • Proof of active ABN

 

Conclusion

On a concluding note, if you are looking for a finance broker to facilitate a business line of credit in Australia and find you a reliable lender with favourable terms then look no further than Broc Finance. It is the leading finance broker agency in the country with a robust network of credible lenders who can offer you a wide range of business financing products suitable for your needs.    

Source: https://www.brocfinance.com.au/blog/faqs-on-business-line-of-credit-in-australia/

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