The margined line of credit that banks once offered was the perfect tool for small and medium (SME) owners. It provided access to just the right amount of working capital exactly when they needed it at a very low rate. It is unfortunate that they are no longer available.
A lot of private lenders now seem to be offering their own version of a line of credit but business owners need to be careful. They may not be unable to refuse the offer they receive. A quick loan with weekly payments, high interest and a variety of fees. Most of these loans will need to renew more than once.
I’m optimistic that lenders will eventually figure out what SME owners really need at an affordable rate and better terms. The margined line of credit hasn’t completely disappeared it is simply evolving.
Fintech lenders now have ways to closely monitor accounts receivable, inventory and any other collateral they choose to lend against. They can now gain access to bank accounts and accounting systems which allows for live and ongoing audits. This greatly reduces their risk and cost of maintenance and will eventually lead to lower rates.
Of course, every business is different and the tools that work best are dependent on the industry and the situation. The basics of business finance will always remain the same but the tools may change. How and when those tools are best used will also differ and will change over time.
At True Viking Finance we introduce our clients to the old and the new world of small business financing. We take the time to understand our clients needs. We use our experience and our current knowledge and connections to help them achieve long-term success.
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