Why Credit Line Is Necessary

Let’s consider such type of crediting as a credit line. The essence of such crediting is that money issued to the entrepreneur not immediately and in certain parts. The general credit limit makes a reservation in case of the conclusion of the contract between the borrower and bank and can be expanded as agreed by the parties. Then also sequence is determined in which money from bank will come. Such scheme is very convenient in case of implementation of new projects which have certain stages of implementation and to the companies working in the regular mode as at the right time it will be always possible to use a loan without additional visits of the bank and registration of a new credit.

There are some conditions for issue of such credit. The credit for business initially implies the impressive assets. The bank has to reserve for the client directly all stipulated amount, however the client has opportunity to use just its necessary part and respectively to pay percent just from it. It is absolutely unprofitable to the bank, therefore it grants a similar credit only to regular reliable clients who have fixed accounts at the bank, and they can provide mortgage property. But even in case of the most trusting relationships the term of such type of crediting doesn’t exceed 2 years.

In case of the conclusion of the agreement on provision of a credit line options can be stipulated, such as the renewed and not renewable system of turnovers. In case of the first option you have an opportunity to take that amount which is necessary to you and then to repay back. There can be an infinite set of such transactions for the period of credit use. By the second option the bank itself enlists tranches in the initially stipulated period and, after the repayment you won’t have the opportunity to use them again.

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