SBA Line of Credit

Working capital can be difficult to obtain from a lender. If you only need to borrow money for 12 months or less to keep your business moving, an SBA line of credit may be a great solution for your business. Because of the SBA guarantee lenders are more lenient in the underwriting guidelines for approving these loan types.

Businesses owners who have lines of credit enjoy greater flexibility with their working capital. Some businesses will purchase more inventory at discounted rates with their operating lines. Others will support operational expenses and payroll during seasonal months. As long as the borrowing need revolves in a 12 month period, lenders are not concerned so much with the use of proceeds. (It is considered a red flag to loan officers when balances on a line of credit do not revolve. Make sure you pay your line of credit down to a $0 balance each calendar year for at least two weeks.)

The SBA guaranteed lines of credit can be written for a two year term. Traditional credit lines are only approved for a year.  SBA guarantee fees are assessed driving the initial cost of funds up in acquiring the financial instrument. It will be well worth the fees to acquire the peace of mind this tool will offer your business owner, CFO and operations manager.

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