The era of the “margined” line of credit is over! This is not good news for small and mid-sized (SME) business owners. It was the perfect tool and provided working capital when it was needed at a very low cost. Maybe that is why it no longer exists.
The system of extending funds to SME owners based on paperwork that they themselves prepared never seemed like a good idea to me. The process was open to exaggeration and the high cost of monitoring and overall risk was far greater than those low rates could support.
SME owners are still looking which is why the term “line of credit” is used to promote such a wide variety of financial products. This includes loans that do not operate anything like a line of credit, are far more expensive and can cause bigger problems than they were meant to solve.
There have always been good alternative finance options and with improved technology and worldwide competition they are now less expensive and easier to use. What was available only to big business is now available to the average North American SME.
I’ve been working with these alternative financing tools my entire career. Now as a business finance guide under True Viking Finance Inc. I help SME owners to explore their these tools. I save them time, money and frustration and I only succeed when they succeed.
When you next encounter a business owner asking about lines of credit make sure they have the right information. What they are looking for may no longer exist. What they need to do is explore their options.
