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When your company is growing and would like to increase the current line of credit (LOC) limit, become familiar with current rates. Get bids from the market from other banks.
Banks have one of two problems. Some banks will have cheaper interest rates but will charge for the unused portion of the line. Others will have a larger initial signup fee. Others will charge you a fixed fee for a period of time while others will insist on a floating rate based upon some index at the end of the month.
Get competing bids before you decide. When you have leverage, get competing bids even if you are not interested in changing banks just to see what the total fee costs are from various banks. All are different, based upon their needs. Some have too many loans and need deposits. Some have too much cash and need to make loans. You will notice the difference in rates when you gather up bids.
Calculate what fees will cost you. If you know what you average at the end of the month, the time when the unused portion fee is calculated, you can see how much this fee costs you in case you wish to ask for it to be eliminated by your bank. Look back twelve months and see what it would have been with the higher LOC balance you are seeking.
