These include lines of credit, working capital loans and accounts-receivable loans. Long-term loans usually mature in one to seven years, but can be longer for real estate or equipment. These loans are used for major business expenses such as vehicles, purchasing facilities, construction and furnishings. They also can be used to carry a business through a depressed cycle. Credit line offers are usually short-term, about 90 days, but can go up to several years with regular annual reviews.
Interest rates are variable.
The bank acts as an intermediary, promising to pay the seller if all conditions are met. Important for reducing risk for a business practicing international trade. Bankrate Inc. All rights reserved.