Line of Credit Options for Small Businesses

Running a business is a challenge, but it can be even more difficult if you are trying to establish a small business. The failure of many small businesses is because of issues with cash flow, so it is important to keep it manageable. Lines of credit can help you pay for what you need when you need it. There are a few ways to get the funds you need to keep your business running. 


One way to secure cash is to turn to investors. This can be beneficial to a business in its early days, and there may be people and/or organizations with the desire to support small businesses through lines of credit. The terms and the upfront loan amount will depend on the amount of money needed and your potential for profit. You should be sure to understand your terms, even to the point of consulting an accountant just to make sure you will not get hit with surprise charges or tax liabilities. A written, legally binding agreement will protect you and your investors.


This form of fundraising utilizes investors, but on a larger scale. This relatively new way of obtaining funds can be done through advertisements and mail, but the most popular option is through internet sites like Kickstarter, SeedInvest Technology, or Indiegogo. Not only can crowdsourcing be effective in generating capital in a short time, but it can also spread the word about your business and gain new customers. 

SBA 7 (a) Loans

The Small Business Administration guarantees these loans, which can improve the chance for small businesses to establish lines of credit with lower interest rates. There are several types of loans available with limits of up to five million dollars. There may be some requirements to be approved, but many start-ups have had more success getting financing through SBA loans.

Traditional Bank Credit

This is the most straightforward way of establishing a line of credit; it is an open loan that a small business can withdraw funds from when needed. If your business is well-established, you may be approved for an unsecured line of credit, though if your business does not show consistent revenue, you may have to put up some collateral. If you have poor credit or have had difficulty repaying loans, you may have a tough time securing approval.

There are quite a few ways for small businesses, even start-ups, to establish lines of credit. From a traditional lender to less conventional crowdsourcing, you could get the funding your business needs to succeed.