Checklist for Closing a Commercial Line of Credit

A line of credit is made to a business when it is in need of operating capital. The lender determines the maximum amount based on the company's creditworthiness and profits. When terminating the business, it becomes necessary to close the commercial line of credit in order to protect against unauthorized activities that can negatively impact the company's credit.

Review Credit Agreement
 
Review the terms and conditions of the credit agreement. The original contract document will outline the terms and conditions of the loan or line of credit. Carefully review the information to determine if there are early termination fees or penalties if the business closes before the loan term ends.

 
Business Dissolution
 
Determine an exact date you intend to close the business. Terminating the business begins on the last day you conduct business. There should be an official filing for dissolution with the state. This filing will protect the business from business tax liability and any future business disputes.

 
Contact Lender

The lender can provide additional guidance on how to go about closing the credit account. It is advisable to obtain a payoff quote in writing, and this is often valid for a limited time.

 
Repayment of Credit Balance
 
Set up a repayment arrangement with the lender. The balance on the line of credit has to be at $0 before it can be closed. To repay the line of credit, you might pay the balance off at one time or continue making payments.

 
Notify Credit Reporting Agencies
 
When you are closing a line of credit, you should notify the credit-reporting agencies like Equifax, Trans Union and Experian. Watch the business's credit file and record after the business is closed to be sure no unauthorized transaction takes place.