Asset purchase lines are priced similarly to working capital lines. The rate is typically fixed, although some lenders may opt for an adjustable rate, meaning the rate will change at set intervals during the amortization period. A business line can also be used for construction. While large, multimillion dollar projects require full-on construction loans, small businesses can complete projects lesser in scope utilizing a non-revolving line.
The most common example of this type is a leasehold improvement or fit-out. For example, a pizzeria owner leases a space for his restaurant.
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He will put up his own collateral such as a personal residence, cash or equipment and apply for a business line of credit. A business line for construction purposes works in the same way as an asset purchase line. The difference is that the borrower will initially fund the work out of pocket. As work is completed, he will provide invoices for the work in place to the lender.
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The lender will inspect the site to ensure the improvements have been completed according to plan. Once satisfied, the lender will authorize the advance to reimburse the borrower. Pricing and terms are similar to the asset purchase lines, with an interest-only advance period followed by a three- to seven-year amortizing loan. A less-common type of business line of credit is a guidance line. A guidance line is different in that it is not as readily available as the other types. A guidance line serves as a perpetual approval.
For example, a real estate development company wants a guidance line to purchase properties to renovate and cell. At the time of application, it does not have specific properties in mind, but it wants the flexibility to move quickly when an opportunity presents itself. The line is fixed for a set term, usually one year.
Each time the developer finds an appropriate property, he will draw under the guidance line. The terms of each mortgage under the line will be the same for each mortgage, typically an adjustable loan amortized over 20 to 25 years with rate resets every five years. When the guidance line matures, the lender will review the loan for renewal or simply let it expire.
Carl Carabelli has been writing in various capacities for more than 15 years. He has utilized his creative writing skills to enhance his other ventures such as financial analysis, copywriting and contributing various articles and opinion pieces. Carabelli earned a bachelor's degree in communications from Seton Hall and has worked in banking, notably commercial lending, since Skip to main content. Working Capital A working capital line of credit makes funds available for your business while you wait for payment on your accounts receivable. Asset Purchase An asset purchase line works in a similar manner to a working capital line.
Why is it important to articulate and express Purpose to customers?
In this Triple Pundit article Zachary Hirschfeld argues that the triple bottom line will die because save for large companies with the bucks to change their operations to be more sustainable, the smaller and mid-sized businesses claiming to be triple bottom line focused are mainly greenwashing. Hirshfeld comes at the triple bottom line from a purely environmental standpoint, rather than a more holistic sustainability frame.
It gives Purpose-driven companies an advantage over non-Purpose-driven companies regardless of size. Of course, the fakers can claim Purpose through PR as well, but B Corps and for-benefit companies can win on brand alignment and focus on customer retention to gain market share.
Victory is possible as long as Purpose is infused throughout an organization and then leveraged to connect with customers and other stakeholders.
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This is where some for-benefit companies are stumbling. And most do.
Heck, they may have put the quad in quadruple bottom line. But not all of them are expressing their Purpose well and using it as a differentiator. B Corp Greyston Bakery uses Purpose to drive everything else, including their positioning. Greyston exemplifies how a strong Purpose can drive the profit, people and planet elements for the bottom line.
They could just corner the market on organic catnip and pet toys made of eco-fabric and other sustainable materials. Runa , also a B Corp, is another Purpose-first company. When living in Ecuador, founders Tyler Gage and Dan MacCombie saw that the local Kichwa people were drawn to unsustainable activates like logging as a means to support themselves. To provide a sustainable income sources for the Kichwa, they created Runa, an energy drink derived from a naturally caffeinated tree leaf native to the Ecuadorian Amazon called guayusa.
The company was born from Purpose: to create a sustainable source of income for the communities that better served them and the planet. Runa exists to support small farmers in the Amazon while maintaining the integrity of the rainforest. We can only prove that business can be a force for positive change if we let our Purpose guide everything we do — and share it with the world. Has your company embraced Purpose as the driver for decisions?
How do you measure Purpose? Do you leverage Purpose to further your mission and attract and retain customers? Does it differentiate you from competitors? Tell us about your experience in the comments below. Thanks so much, Cliff. And thanks for tweeting it as well! Best, Anne. Brands built around the quadruple bottom line should have customer-pleasing covered since benefiting people is part of their approach, but in my […].
Why are you in business and what mission do you serve? If we help companies like B Corps and other for-benefit businesses connect their Purpose with consumer values to engage customers in the purchasing process, we can change the way consumers act so when they […]. We're not around right now. But you can send us an email and we'll get back to you, asap. By Anne Boyle. Anne is a strategic partner to RoundPeg, offering consulting on select projects to figure out how to use marketing to help people make good choices.
In her free time, she enjoys sampling obscure teas, spending as much time at the beach as possible and spoiling her darling rescue dogs, Molly and Phoebe.