In a pinch, small business lines of credit give business owners the cash they need to push through. It’s the perfect cash flow injection when your business is growing, or when you need wiggle room to make it through slow periods. As you go, though, it’s important to keep your business line of credit maturity date in mind.
Simply put, your business line of credit maturity date is the point at which you’re expected to fully pay down your balance, including all interest and principal. When you receive funding, you should be given your business line of credit maturity date by the lender. Otherwise, you can reference your copy of the agreement, or ask your lender.
Your business line of credit maturity date is important. After all, it marks the point at which you’re free from any debts, and ready to take the next step in growing your business. However, it shouldn’t come out of the blue.
The maturity date should be established when you finalize the financing agreement on your commercial business loan or credit line. In other words, you should be aware of this crucial date before you even receive funding.
If you don’t remember your business line of credit maturity date, though, you can reference the financing terms. The financing terms are an important aspect of every loan or financing agreement, and include figures like the amount, interest rate, and term length.
The term length is the total period of time over which you must pay for your business line of credit. To find your business line of credit maturity date, simply count forward from the date you received the loan. For example, if your term length is 24 months and you received your line of credit on June 15th, 2018, then your maturity date would be June 15, 2002.
If, for whatever reason, you can’t find your agreement or term length, you’re not out of luck. Instead, simply reach out to your lender and inquire about your maturity date. Most lenders should have your agreement readily available.
To strategically manage your finances, always record the maturity date of any new business lines of credit as you receive them.
On any loan or financing agreement (including personal options like a home equity line of credit), your maturity date is the point at which you’re expected to repay the entirety of the balance. This includes the principal amount you initially received, and any interest accrued throughout the term length. You can also think of the maturity date as the end of the payment term. More often than not, you’ll discuss your business line of credit maturity date with your lender early on.
Naturally, the maturity date for short term financing products comes up sooner than long term products. For example, a short term line of credit (which may only have a payment term of 1 year) will have an earlier maturity date than a longer term product, like an SBA loan.
In most cases, you shouldn’t be caught off guard by the maturity date. After all, you’ve been making payments toward moving past this debt for the duration of the term. Generally, the maturity date is the last of many equal payments, rather than the due date for a huge sum of money.
If not paid by the maturity date, then you may have fallen behind on interest payments.
Depending on your rates, interest payments can account for a significant portion of your total payback amount. But because your term length is determined with your rates in mind, the rate generally won’t change this.
Most of the time, your line of credit payments will either go toward interest or principal. But, the payment amount won’t change. Your monthly, weekly, or daily payments are calculated with the total cost of the interest and principal in mind.
Generally, lenders will put payments at the beginning of the term toward interest, and toward principal as the term progresses. Even if they don’t, though, your bottom line (and total payback amount) won’t be affected.
A revolving line of credit follows the same basic format as standard business lines of credit, but differ slightly.
Unlike a regular line of credit, revolving lines of credit allow you to draw more cash after paying down the owed amount. In other words, you can restart the cycle by taking more cash.
As far as the business line of credit maturity date goes, this can be a little confusing, since revolving credit lines allow for flexibility.
If your financing package is revolving, then there would be a new maturity date for the second round of funding. In other words, your business line of credit maturity date would be pushed out to reflect that you’ve borrowed additional cash. If this happens, most lenders will work with you to establish a new date.
When’s the last time you learned how much you can borrow?
At National, you can learn your financing options in minutes and get funded in just a few hours. Our Business Financing Advisors are ready and willing to talk you through all the details, including your total payback amount, maturity date, and the best offers on the table through our 75+ lender network.
You can even find an unsecured line of credit that doesn’t require collateral.
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