What Is a Business Line of Credit Maturity Date?
What effect has a maturity date on your business line of credit?
First off, a small business line of credit enables entrepreneurs and small business owners to quickly access the working capital needed to operate businesses and push through lean months. It is the perfect funding option to help steady the growth of your business.
However, to use the credit line smoothly and grow your limits, you must watch your business line of the credit maturity date.
What is a business line of credit maturity date?
This is the agreed deadline for completing the repayment of your credit balance. That includes interest and principal. It’s crucial to ensure that your lender gives you a maturity date. You can go through your copy of the agreement or ask them for a maturity date if you can’t find one.
The maturity date is the agreed deadline for completing the repayment of your credit balance.
How Do You Find Your Business Line Of Credit Maturity Date?
A maturity date is vital because it marks a completed milestone that assures you of the next step of your business growth. However, this achievement could turn south if it comes out of the blue.
So, how do you ensure you’re not caught off guard by a maturity date?
If you’re working with traditional lenders, ensure by the time you finalize your business loan or line of credit agreement, you establish a maturity date as well. Simply put, understand the deadline before receiving the funds.
Some Alternative financiers have a Business Funding Advisor that will help you establish a reasonable business line of the credit maturity date.
But what if you forgot your maturity date?
It’s easy to forget a maturity date when you’re caught in business operations. Therefore if the date has slipped your mind, you can refer to the financing terms.
Still, suppose you don’t find the date on your term agreement for whatever reasons, don’t fret. Instead, inquire from your lender, and they’ll issue you one. Usually, if your lender is transparent, they will have a copy readily available.
A maturity date should be stressed like other essential factors of loans, e.g maximum amount, interests, and terms length.
Although it’s easy to confuse between a term length and maturity date. The two differ slightly.
What is a term length?
The term length is the sum period you need to repay your business line of credit. And maturity date is when the final repayment should be made.
You can manually set the maturity date by counting days forward from the date you receive the credit. For instance, if your loan term limit is 24 months and you received your credit line of business on January 1st, 2023, then your maturity date line will be January 1st, 2025.
Recording your business loan maturity date or a line of credit is vital in managing your credit.
Is Business Line of Credit Maturity Date Fixed?
You’ll discuss a suitable maturity date with your lender during the application process.
Typically, short-term financing options like credit lines have a shorter maturity date than long-term financing products like business loans. For instance, a line of credit is a short-term financing source that can have a payment term limit of 1-3 years. That means its maturity date will be earlier than other products like SBA loans.
So how can you manage your maturity date efficiently?
Making timely payments during your credit term will help you avoid being caught unaware of maturity dates. Because the date is like the finishing point of several charges and not the last date you make a massive sum of money at once after skipping others.
Now, what happens if you fail to meet the maturity date on time?
Lenders have different penalty fees and terms. However, ensure you catch up on your interest payments to avoid penalties.
Does interest payment affect your maturity date?
How Do Interest Payments Affect The Maturity Date?
Interest rates may account for a considerable portion of your total repayment amount. But since your term length is based on your rates, the interest payment doesn’t usually impact these
In most cases, a typical line of credit payment goes to either principal or interest. But the amount you pay remains the same regardless of where the payments go. Your payment can be daily, weekly, or monthly, calculated based on your total principal and interest.
For instance, you may receive a two-year business line of credit with interest-only payments, and later a maturity date when all the remaining balance should be repaid.
How Does a Revolving Line of Credit Maturity Date Work?
A business line of credit revolving maturity date applies almost the same criteria as the standard business line of credit but with a slight difference.
Here is the contrast.
Unlike regular lines of credit, revolving business lines of credit feature flexible maturity dates.
And here’s the reason.
A revolving business line of credit gives you access to more funds after making a repayment of the amount borrowed. It’s basically a cycle of drawing and paying back. Therefore, each funding round comes with a new maturity date.
Where Can I Find Flexible Business Lines of credit?
Do you want a 90-second application?
You can work with a qualified Business Funding Advisor to take you through suitable financing options and loan details, including interest rates, terms, and maturity dates, and then potentially get same day approval and funding within 2-3 days.