In a pinch, small business lines of credit give business owners the cash they need to push through. It’s the perfect cash flow injection when your business is growing or when you need wiggle room to make it through slow periods. As you go, though, it’s important to keep your business line of credit maturity date in mind.
Simply put, your business line of credit maturity date is the point at which you’re expected to fully pay down your balance, including all interest and principal. When you receive funding, you should be given your business line of credit maturity date by the lender. Otherwise, you can reference your copy of the agreement or ask your lender.
How to Find Your Business Line of Credit Maturity Date
The maturity date should be established when you finalize the financing agreement on your commercial business loan or credit line. In other words, you should be aware of this crucial date before you even receive funding.
If you don’t remember your business line of credit maturity date, there are a few ways you can find it.
- Reference the financing terms. The financing terms are an important aspect of every loan or financing agreement and include figures like the amount, interest rate, and term length.
- Count forward from the date you received the loan. For example, if your term length is 24 months and you received your line of credit on June 15th, 2018, then your maturity date would be June 15, 2002.
- Reach out to your lender and inquire about your maturity date. Most lenders should have your agreement readily available, so a simple phone call can yield the answers you need.
To strategically manage your finances, always record the maturity date of any new business lines of credit as you receive them. Whether a digital record or paper, having this information somewhere close by can help you stay on top of your financing.
What Is the Maturity Date, and How Does it Work?
On any loan or financing agreement (including personal options like a home equity line of credit), your maturity date is the point at which you’re expected to repay the entirety of the balance. This includes the principal amount you initially received and any interest accrued throughout the term length.
You can also think of the maturity date as the end of the payment term. More often than not, you’ll discuss your business line of credit maturity date with your lender early on.
Naturally, the maturity date for short-term financing products comes up sooner than long-term products. For example, a short-term line of credit (which may only have a payment term of 1 year) will have an earlier maturity date than a longer term product, like an SBA loan.
In most cases, you shouldn’t be caught off guard by the maturity date. After all, you’ve been making payments toward moving past this debt for the duration of the term. Generally, the maturity date is the last of many equal payments, rather than the due date for a huge sum of money.
If not paid by the maturity date, then you may have fallen behind on interest payments.
Does a Line of Credit Have a Maturity Date?
Yes, but only if the line of credit doesn’t carry a revolving term. Revolving lines of credit technically have no maturity date, while traditional lines of credit come with a set date where all borrowed funds must be repaid in full.
Your financing contract will disclose whether your term is revolving or not. If, for some reason, that information isn’t available within your contract, you should reach out to your lender and inquire about your term.
How Interest Payments Affect the Maturity Date
Depending on your rates, interest payments can account for a significant portion of your total payback amount. But because your term length is determined with your rates in mind, the rate generally won’t change this.
Most of the time, your line of credit payments will either go toward interest or principal. However, the payment amount won’t change. Your monthly, weekly, or daily payments are calculated with the total cost of the interest and principal in mind.
Generally, lenders will put payments at the beginning of the term toward interest and toward principal as the term progresses. Even if they don’t, though, your bottom line (and total payback amount) won’t be affected.
Review Your Documentation to Identify Maturity Date
The contract you received from your lender at the start of your financing will contain information related to your maturity date. If it doesn’t explicitly state the maturity date, here’s what to look for:
- Near “Start Date,” you should be able to find the maturity date. This field may be called “end date,” “final payment date,” or something similar.
- Find the “term” on your financing contract. Take this number and add it to the start date. For example, if your start date is June 5th, 2023, and your term is “5 years,” your maturity date is June 5th, 2028.
If, for any reason, your contract does not contain this information, contact the lender you secured the loan from and ask for it. You’ll likely need your contract/account number to access this information, so make sure to have it readily available.
What About Revolving Lines of Credit?
A revolving line of credit follows the same basic format as standard business lines of credit but differs slightly.
Unlike a regular line of credit, revolving lines of credit allow you to draw more cash after paying down the owed amount. In other words, you can restart the cycle by taking more cash.
As far as the business line of credit maturity date goes, this can be a little confusing since revolving credit lines allow for flexibility.
If your financing package is revolving, then there would be a new maturity date for the second round of funding. In other words, your business line of credit maturity date would be pushed out to reflect that you’ve borrowed additional cash. If this happens, most lenders will work with you to establish a new date.
Learn Your Business Line of Credit Options With a 60-Second Application
When was the last time you learned how much you can borrow?
At National, you can learn your financing options in minutes and get funded in just a few hours. Our Business Financing Advisors are ready and willing to talk you through all the details, including your total payback amount, maturity date, and the best offers on the table through our 75+ lender network.
You can even find an unsecured line of credit that doesn’t require collateral.
Get the ball rolling by applying now!