When to Get a Line of Credit

A business line of credit is insurance against cash flow gaps. Here's when to get one and how to use it.

Get It Before You Need It

Banks lend when you don't need money. Try to borrow during a cash crunch and terms get worse or you get declined entirely. Apply when business is strong.

What to Expect

Credit lines for small agencies: $25K-$100K. Rates: prime + 2-5%. Annual fees: $0-500. Draw only what you need, pay interest only on what you draw.

When to Use It

Bridging gaps between client payments. Covering payroll during slow months. NOT for growth investments or covering ongoing losses.

Where to Get One

Start with your business bank—existing relationship helps. Credit unions often have better terms than big banks. Online lenders (Kabbage, Fundbox) are fast but expensive.