Open-End Loan a Financial Tool for Women in Business

Open End Loan and Lines of Credit for Business Women

A useful financial tool for women, an open-end loan is a loan that you can use part of, make a payment, and borrow more without going back to the lender for approval on the subsequent loans or charges. You do have a limit, and can borrow up to that limit at any time.

A good example of an open-end loan is a credit card, or a personal line of credit. The lender extends, for example, a credit limit of $1000. Women can withdraw or charge an amount, $600, and then withdraw or charge another amount, up to the limit of $1000. Interest is charged at a pre-agreed upon rate.

The opposite of an open-end loan is a closed loan. An example of this is a mortgage, where the lender allows you to borrow a certain amount all at once. You cannot go back in and borrow more on that loan. You make payments with interest until a date certain, at which time the loan is entirely paid off. You cannot borrow more even after making a number of payments. You can pre-pay the loan at any time, and then the loan agreement is closed, or over. To borrow more money, women would need to renegotiate another new loan.

The advantages of the open-end loan agreements, such as credit cards or personal lines of credit, are that she can continually use the credit amount, up to the limit, at any time. You can pay off part of the limit, and add to the charges on the loan, and so on. As long as you continue making timely payments and interest payments, you can continue to do the self borrowing without going through any further negotiations with the lender. They may raise your credit limit at any time.

These open loans are commonly used for normal household charges, for building construction, and business use for every day purchases or expansion. The loan vehicle, that is, the credit card, or line of credit has no specific end date.

For business use, a line of credit would be used for larger expenses, and it can run into tens of thousands of dollars. It can be used to purchase many items, including machinery and equipment, supplies, parts, or advertising for the business. In construction, the line of credit loans are used to purchase supplies and materials for remodeling or constructing an addition to a building.

For women to obtain either a credit account, or line of credit from a lender, a good credit payment history is required for the best interest rates and approval.