The Benefits of a Commercial Line of Credit

There are several financing options for your business, including a commercial line of credit. This option is ideal for covering recurring, specific, and short-term working capital operational needs, especially since you must repay them in 12 months or less.

The line of credit can also be tied to your business account, providing protection against checks with insufficient funds and unexpected expenses.

What is a line of credit¹?

It is a credit facility granted to cover specific needs, up to a predetermined amount, with a maximum limit valid for the duration of the line, and  usually revolving in nature. The lines are activated at the client’s request or automatically, depending on the product granted subject to credit approval and require an annual review.

When should you apply for a line of credit?

A line of credit may be an alternative if your business needs to:

• Increase and manage cash flow
• Finance inventory
• Access additional capital to cover unexpected situations
• Manage seasonal sales
• Cover a business financial gap

“To find out which credit alternative fits your needs, the first step is talking to your Commercial Relations Officer or the manager at your preferred branch. During the interview, it will be determined which, among our different products, is best for your business according to the type of industry and financial structure, among other factors”, said Corina Camacho Peinado, manager at Popular’s Commercial Credit Division.

For example, you may need to buy office supplies or items to make meals you will sell in your business. There are several financing alternatives, one being a line of credit, but there’s also the option of applying for a commercial credit card. You will get personalized guidance from a Relationship Officer or the branch manager, based on your interview with them.

“There are lines for operational capital, for construction, and for certain specific short-term needs. There are secured lines of credit using mortgage collateral or some other collateral. In addition, as a preferred lender accredited by the United States Small Business Administration (SBA), we offer guaranteed lines of credit options under different SBA programs,” Camacho Peinado added.

Types of lines of credit

The revolving line of credit may be tied to a business account. It offers, among other benefits:

• Cash flow to cover expenses
• Protection against checks with insufficient funds, late payments, and unexpected fees
• Advances of automatic funds in the business account

The non-revolving line of credit, on the other hand, allows you to draw a specific amount based on the advances requested; once the funds are used, they are no longer available, as the line is granted for a specific purpose, such as financing a construction contract, service contracts with state and/or federal government, among others.

What you need to apply for financing

At Popular, you can apply online or at the branch of your choice. If you do it online, the business platform will ask you for information based on your answers. However, the key is interviewing with a Relationship Officer or a branch manager.

Regardless of the kind of financing for which you apply, try to have the following information of your business at hand:

• Financial statements of the applying debtor and its principal, if applicable
• Projections
• Specific and complementary information that justifies the financing request, which may vary on a case-by-case basis (for example, accounts receivable reports, accounts payable reports, and inventory reports). 

For more information, please call our Commercial Support Center, contact your Relationship Officer, or visit the branch of your choice.

¹ Any extension of credit, whether through credit cards, lines of credit or loans, is subject to credit approval. Certain conditions apply.

This article is for informational purposes only and does not constitute an endorsement or guarantee of accuracy or applicability for any particular purpose. Neither Popular, Inc. nor any of its affiliates, subsidiaries, and/or related companies shall be liable for any special, direct, or indirect harm stemming from the information contained in this article. Should you require further information or guidance with regard to this article, you should always seek the advice of a competent professional of your choice.