What's My Line?

What's My Line?

Does your business have a line of credit (LOC)? If not, does it need one? If you’re a newbie when it comes to this financing vehicle, here’s what you need to know.


Your business may run fine without a line of credit, but that doesn’t mean you won’t need one if a future opportunity arises or a temporary financial crisis occurs. A business LOC is typically unsecured and usually available for any business reason. Interest rates may be lower than for a standard business credit card but are often higher than for a business loan.

The major difference between a loan and an established LOC is that the latter is available without having to wait. That ready money can be helpful if, for example, you find an “act now” deal on supplies or you have a spur-of-the-moment marketing or business development opportunity. A LOC also helps pay bills when business unexpectedly slumps, such as during a stretch of bad weather.


Your business may qualify for a LOC if you have a good personal credit score and the business has been in operation at least a year or two and can demonstrate a consistent income flow. Talk to your accounting professional to learn if a LOC can help your business.

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