Business Line of Credit From Bajaj Finserv ✔ Withdraw When You Need ✔ Interest Charged Only on the Utilized Amount ✔ Pay up to 45% lesser EMI ✔ No Extra Charges on Part-prepayment

Line of Credit

What is a Business Line of Credit?

Businesses are in constant need of a steady supply of working capital for their various operation needs. There are times when your business may need additional working capital, or might need to purchase new machinery, or may need business finance if you are looking to expand operations.

This is where a Business Line of Credit helps you.

A Business Line of Credit is a credit line where you get a predetermined credit limit, for a pre-set tenor. For the duration of this tenor, you can withdraw funds from within the credit line, as many times as you need, up to the credit limit.

You only have to pay back the interest amount as your EMIs, which reduces EMI up to 45%, making the loan more affordable for you. This interest is charged only on the funds you borrow. The principal amount can be repaid at the end of the tenor. You can also choose to pre-pay it at any time you like, without having to pay any extra charges.

Benefits of a Business Line of Credit

These are the ways in which a Business Line of Credit can help you finance your various business needs:

  • You can withdraw funds from your credit line, whenever you need them. If you need extra funds to buy new machinery or lease a new office space, or if you need to increase your working capital, you can do so instantly by withdrawing the funds you require from your Business Line of Credit.
  • There are not extra charges levied whenever you withdraw funds from the credit line.
  • Pay only the interest on the funds you borrow, as your EMIs. This makes the loan easier on your pocket, and ensures that you can allocate more money to the expansion of your business.
  • You get complete online access to your loan account through our customer portal, Experia. From here you can withdraw funds from your credit line, and repay them, whenever you like.
  • You can part-prepay your loan as many times and up to whatever amount you wish. There are not charges on part-prepayment.
  • You can convert your Business Line of Credit to a term Business Loan whenever you want.
  • You do not need to pledge any collateral to take a Business Line of Credit.

Difference between a term Business Loan and Business Line of Credit

There are several ways in which a Business Line of Credit differs from a term Business Loan. These are:

  • A line of credit (LOC) lets you withdraw funds as many times as needed from a fixed credit line, up to a credit limit. Thus, you borrow only the amount you actually need. On the other hand, in a term loan, you get the complete loan amount as a lump-sum, even if you do not need all of it right away.
  • In an LOC, you pay only the interest amount as EMIs. On the other hand, in a term loan, you repay both interest and principal amounts as EMIs.
  • In an LOC, the interest is charged only on the actual amount you have withdrawn, and not the entire credit limit. This means that you pay less interest. On the other hand, in a term loan, the interest is charged on the entire loan amount, making this amount higher than it is in an LOC.

The following table shows the difference in cash flow between a Business Line of Credit and a term Business Loan:

Parameters

Term Business Loan

Business Line of Credit

Loan amount

Rs. 20,00,000

Rs. 20,00,000

Tenor

36 months

36 months

ROI

20%

20%

Monthly cash flow (EMI)

Rs. 74,327

Interest amount of Rs. 33,333

(This is subject to full utilisation of the credit limit.)

Yearly cash flow

Rs. 74,327 * 12 = Rs. 8,91,926

Rs. 33,333 * 12 = Rs. 3,99,996

Difference in annual cash flow for you

(This is subject to full utilisation of the sanctioned credit limit for the full year. If you do not use the full credit limit, you can save even more on the interest, as well as maintain liquidity as you will have the option of withdrawing more funds from the remaining credit limit.)

Rs. 8,91,926 – Rs. 3,99,996 = Rs. 4,91,930

Line of credit facility

Business loan allows you to avail ‘line of credit’ facility, also known as ‘flexi line’. Line of Credit is a unique credit facility given to our loan applicants, wherein you are approved for certain limit of credit/ loan, for a said duration. The monthly instalment for Line of Credit will consist only of the interest amount and will not have a principal component on a monthly basis. The principal amount of loan is to be repaid at the end of the tenure of the facility. Hence, it acts as a big saving arm to your cash flows.

Benefits of Line of Credit

  • Your monthly instalment is only the interest amount charged for the month, unlike any other term loan.
  • Access all your loan related information or transactions online at our customer portal
  • You can opt to part- prepay your loan amount, anytime of the year, with no additional charges.
  • No additional cost levied on withdrawals/ drawdown
  • Convert your term loan into line of credit, anytime of the year
  • Bullet repayment option available at the end of the year.

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