Lines of credit are amazingly helpful to small business owners. These owners may have issues with cash flow that make it hard to run operations smoothly. It’s not that the business doesn’t have enough revenue, but that customers aren’t paying bills quickly enough. In this situation, a line of credit can tide the company over, providing funds to cover payroll, inventory bills, rent, taxes, advertising, and similar needs.

A common question is whether a small business can apply for lines of credit with the Small Business Administration. The SBA has a reputation for being tough but fair, often approving loans for real estate, equipment, and other large purchases. What about a line of credit for everyday needs?

What Are SBA Lines of Credit?

First, the good news. Yes, your business can get SBA-backed financing in the form of a line of credit. Like other credit lines, these programs supply revolving credit: You pay interest on the amount of funds you use, pay them back and have access to them once again. You can keep utilizing this type of financing for many years.

Where Do You Get an SBA Line of Credit?

This is where things get a little tricky. You need to apply for the SBA line of credit with a participating lender. The lender is the one that provides the funds you need and keeps making them available. That said, the SBA also has to approve the transaction. In other words, you need to qualify both with the lender and the SBA.

This requires jumping through a few extra hoops before you can get your line of credit. Fortunately, once you’re approved, you can keep using the credit line however you see fit (within reason) without needing to renew it. The benefits of having a flexible line of credit far outweigh the effort required in applying.

What Types of SBA Lines of Credit Are Available?

There are several types of credit lines the SBA backs. The right choice depends on your business. You need to consider your annual needs, your goals, and your customers.

One option is a seasonal line of credit, which helps you adjust to seasonal variations in your income or customer ordering patterns. For example, a retailer that needs an extra boost of capital near the holidays would use this option.

You can also get a line of credit that revolves around construction materials and labor. A popular option provides short-term funding for overhead and basic business needs.

Lending Hub offers multiple SBA programs to help entrepreneurs reach their goals. Contact our offices today to get the financing you need.