Business Line of Credit. Safe to use for a STR purchase?

[Ethan Cole]

Our business has about 60-75% of the funds needed to make our first move into the STR world. Do you think it would be a good move to use a business line of credit to cover the remaining down payment and possible furniture costs? Why, or why not?

Also, I can't seem to find much info on what typical rates/terms there are for a business line of credit. Does anyone have a good idea of what these might be?

[Chris Davidson]

@Ethan Cole you need to look at what kind of leverage that puts you at, and if your will be over exposed. using credit to fund a down payment and furnishings is a good way to run in the red. If you have stabilized cash flow from business activities and will easily be able to make payments then you should be fine. However will you be able to get the loan with a new LOC?

I have LOC secured by a few properties for my business, and have to renew it every two years. Depending on the bank, your business, and your assets expect between 40 and 75 cents on the dollar on 1st position.