Intuit QuickBooks introduces Line of Credit - article (2024)

FAQs

Does QuickBooks do lines of credit? ›

QuickBooks Line of Credit gives small businesses a new way to access fast, flexible funding from $1,000 to $50,000, with loans issued by WebBank. With QuickBooks Line of Credit, small businesses can tap into funding when and how they need, depending on their specific cash flow requirements.

Under Suppliers, select Check. In the Payee field, select or enter the name of the financial institution. Select the bank from the dropdown list in the Bank Account field. In the Category details section, select Line of Credit from the Category Type field and enter the amount you want to pay down the principal.

Lines of credit appear under liabilities on the balance sheet. They are considered current liabilities because they must be paid within the current 12-month operating cycle.

Line of Credit is a liability account in the books. So, you will need to create a new Line of Credit account in the Chart of Accounts. (Why Credit Card type? Because that's the only liability type account, you can connect in QBO banking tab).

A line of credit is typically offered by lenders such as banks or credit unions, and, if you qualify, you can draw on it up to a maximum amount for a set period of time. You'll pay interest only when you borrow on the line of credit. Once you pay back borrowed funds, that amount is again available for you to borrow.

Determining the Line of Credit Available

To calculate the estimated amount you may need for a credit line, divide your gross annual revenue by 365, which determines your sales (daily average). Then total up your accounts receivable and add your inventory days-on-hand.

You'll get a monthly statement showing the amount owing on your line of credit. You must make your minimum payment each month. Usually, your payment is equal to the monthly interest. However, paying only the interest means that you'll never pay off the debt that you owe.

What is an example of a revolving line of credit? ›

Common examples of revolving credit include credit cards, home equity lines of credit (HELOCs), and personal and business lines of credit. Credit cards are the best-known type of revolving credit. However, there are numerous differences between a revolving line of credit and a consumer or business credit card.

Example of a line of credit

You withdraw $10,000 to buy inventory. You'll only pay interest on the $10,000 and can still use the remaining $40,000 if you want.

A line of credit (LOC) is an account that lets you borrow money when you need it, up to a preset borrowing limit, by writing checks or using a bank card to make purchases or cash withdrawals. Available from many banks and credit unions, lines of credit are sometimes advertised as bank lines or personal lines of credit.

Loans and lines of credit are both types of bank-issued debt that serve different needs; approval depends on a borrower's credit score, financial history, and relationship with the lender. Loans are non-revolving, one-time lump sums of credit that a borrower normally uses for a specific purpose.

From the Customer dropdown, select the customer. In the Outstanding Transactions section, select the open invoice you want to apply the credit note to. In the Credits section, select the credit notes you want to apply. Note: You won't see the credits section if you have not created the credit note.

A business line of credit can finance short-term expenses, like payroll or inventory. Both traditional and online lenders offer business lines of credit.

From the Customers menu, select Create Credit Memos/Refunds. From the Customer:Job drop-down, select your customer. Enter the items you're giving a credit for, then select Save & Close.