Access to reliable liquidity is critical for any business, especially during times of uncertainty. A revolving line of credit gives your company flexibility to borrow and repay funds as needed—helping you seize opportunities or navigate downturns. But many business owners wonder: is my line of credit guaranteed?
Pete Zeiser, commercial banker at Midwest BankCentre, explains what you need to know.
Key Takeaways:
- Not Using Your Line of Credit Isn’t a Problem
- Banks don’t typically penalize you just for not using it.
- What matters most is communicating your intended use when it’s up for renewal.
- Why Renewal Conversations Matter
- Your banker will want to know how you’ll use the line of credit:
- Working capital
- Capital expenditures (like equipment purchases)
- Or simply a backup source of liquidity
- Based on your needs, your bank may adjust the size of your line up or down.
- Your banker will want to know how you’ll use the line of credit:
- Understand the Costs
- Unused credit lines can carry costs for banks.
- Some may charge a fee or use deposits as a compensating factor.
- Always ask if there are costs associated with not using your line.
- Bottom Line
- A line of credit is a powerful tool for business stability and growth.
- Regular conversations with your banker ensure you’re getting the most value while avoiding surprises.
If you’d like to explore or renew a line of credit, Midwest BankCentre’s team is ready to help. Contact us online, visit a branch, or give us a call.