Posted almost 3 years ago

Unsecured Business Line of Credit

Small Business Line of Credit

Not just once...but borrow money over and over again for your company. You can do this with an unsecured business line of credit with ProCommerce Capital. This is a great financing option for LLC's that are doing fix & flips, buy & hold, or using the BRRRR (Buy, Rehab, Rent, Refinance, Repeat) strategy. However, you don't have to be in the real estate arena, your business may experience periodic cash flow challenges, seasonal cycles and/or working capital for some other reason.

An unsecured business line of credit is also referred to a revolving line of credit or just "LOC" (Line of Credit).

How Does an Unsecured Business Line of Credit Typically Work:

You will only pay interest when you borrow the money on your LOC, and it is only on the amount you take out. For example: you get a $35K LOC and you take out $1k, you only pay interest on the $1k, not the full $35k. (the minimum payment is interest only)
You are qualified on your business' annual revenue. Annual revenue needs to be $350K+
This money can be deposited directly into your bank account

Interest on a Business Line of Credit

Just because it is a business line of credit does not mean that the interest is automatically qualified as a business tax deduction (Please consult a tax professional). It has to be shown that the money borrowed was used to purchase supplies, equipment, or other items pertaining to the business. If you can show this, then the interest can be claimed as a business expense.

Even though an unsecured business line of credit can give your business the cash infusion it may need. You do not treat this money as income, you only pay tax on the interest that you're charged until you payoff the amount you borrowed. At the end of the year your lender can give you a summary of interest paid for you to use for your taxes.

To keep yourself and your business out of trouble, don't co-mingle business money and personal money. This will also keep it easy for you at tax time.

Deprecation and a Deduction?

You will get a DOUBLE write-off if you use your LOC to purchase equipment for your business. How? You get to write off the interest on the line of credit and depreciate the equipment also. (Make sure to discuss with a tax professional)