Seasonal Revolving Lines of Credit
This type of financing is used to accommodate the seasonal build-up of inventories and/or receivables and repayment is to come from the conversion of these current assets to cash. It may be required that the line of credit loan pay out at a minimum of thirty (30) consecutive days each year from sources other than other bank borrowing.
The accepted seasonal line of credit definition encompasses a fairly extensive range of financial arrangements. In some industries, seasonal fluctuations in demand can result in cash flow difficulties that must be addressed in order to maintain operations at the appropriate level. A seasonal line of credit can provide added flexibility in managing these shortfalls in income. Typically secured by the inventory in stock at the company, seasonal lines of credit offer added funding options for a variety of expenses that may include salaries, utilities and raw materials. The funds are usually repaid when the inventory is sold. For example, a company that produces artificial Christmas trees throughout the year can use the funds from a seasonal business line of credit to manage unexpected expenses. When the Christmas trees are sold during the last quarter of the year, the company can repay its loan and renew its credit limit for use during the upcoming year, allowing it to repeat the entire cycle. These credit arrangements provide a valuable service for businesses that depend on seasonal sales to remain profitable on an annualized basis.
CNF Exchange makes it easier to find and obtain seasonal line of credit arrangements by providing borrowers with a secure online platform to upload their funding request and pertinent financial information. Lenders can then consider their application and respond to it with proposals designed specifically for their stated needs. In some cases, borrowers can select from among a sizable number of offers to find the most advantageous solution for their seasonal business line of credit needs.