we have our line of credit renewal coming up within the next month and we have 3 cards with very high balances (almost maxed) and very high interest rates. is it smart to pay them down before we go thru the renewal process and use our line of credit to do so? our LOC is only 3.25%!
It probably won't help at all with the LOC renewal- underwriters won't like the fact that you're using a business LOC to pay down personal debts. Or are these business credit cards we're talking about? If they're business credit cards, it sounds like that would be the smart thing to do in order to save on interest; however, the underwriters are still going to want to see evidence that you have cash flow in the biz to pay off the balance on the LOC within a decent amount of time. Another thing to consider is that you would be taking unsecured debt and moving it to an LOC that I assume is secured by something of value in your business. That's a big risk to take if you're going through a tough financial period. It's always good to keep unsecured debt unsecured.
yes...these are business credit cards and we have a commercial line of credit. our highest card is a 17.24% interest rate and we're almost maxed...at least paying this one off would be a good idea right?
Without knowing anything else about your business or the amount of debt we're talking about, it sounds like that would be a smart move to simply save on interest. However, if you think it will affect your ability to renew the LOC, you may want to wait until after the line is renewed for another year.
