business lines of credit

[Richard Sanford]

what is the criteria to obtain lines of credit? Business or pesonal lines. Can you choose to go stated income for both ways? Or is that left entirely to the lending institution? Is your personaal credit a determining factor in the business line? Are there normally some sort of fees in going through this process?

[Roger Rouse]

There are different types of lines of credit. The one most people are familiar with is a home equity line of credit, which is subject an appraisal, loan-to-value limitations, and a credit check. It also uses your home as collateral. The interest rate is fairly low, variable, and generally tax deductible.

An unsecured personal line of credit (sometimes called a signature loan) is based your personal creditworthiness. These would be harder to get, and expect to pay more in interest -- which is not tax deductible.

Unless you are a large, well-established company, business lines of credit will probably require a personal guarantee by the owner. The loan is probably going to be secured by the assets of the business, and would be deductible against the business income if used for legitimate business purposes.

Pretty much any line of credit is going to involve looking at your personal credit rating, and probably some fees.