Staying abreast of business line of credit news and trends will help business owners keep their companies afloat during times of national economic distress. For example, what happens to a business line of credit if the lending institution fails? Can the lending institution decrease or close a business line of credit when the economy is weak? Knowing the answers to these and many other business lines of credit questions helps owners know their options when managing their company’s cash flow.

Many business owners rely on a business lines of credit to cover the costs of short-term expenses. Staying informed on business line of credit news and trends will help businesses make better cash flow decisions. Consider the following basic information to keep yourself in the know.

1. Review the stock prices for business line of credit lenders before applying for a small business LOC.

2. Stay informed on changing interest rates.

3. Keep a watchful eye on federal laws and regulations that impact the financial industry.

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Use business line of credit news and trends to borrow wisely

Secured and unsecured business line of credit news and trends will help you better assess the actual cost of credit based on the stability of the economy. For example, when the economy is weak, interest rates on business lines of credit are generally lower. However it may be more difficult to find a lender willing to open an account for you.

I recommend: Regularly visiting the Business Week website will help you stay informed about business line of credit trends and news affecting small business owners. You may also consider checking out Credit Karma to obtain current average interest rates as well as to obtain advice on choosing the right business line of credit for your company. Bankrate.com is a great source of news on interest rates. For a quick look at business credit line rates, try these online loan quote services: BusinessFinance, iBank or LendingTree.com.

Check out the stability of business line of credit lenders

It's always a good idea to check out business line of credit lenders before applying for credit. When the economy is weak, this is even more important. Reviewing trends in stock prices is a great indicator of a particular financial institution's stability.

I recommend: You can obtain free stock market information by visiting the Scottrade website. You can also obtain free stock quotes from NASDAQ.

Keep necessary business credit line documents handy at all times

Most lenders will require a personal statement, certified business and personal tax returns for the past three years and other supplemental information that demonstrates the financial stability of your company. When the economy is weak, credit criteria will be even more stringent so be prepared to provide detailed information about the historical and projected revenues of your business.

I recommend: CNN Money is a great resource from which to obtain up-to-date information on business lines of credit and how to navigate economic downturns. U.S. News and World Report is another online tool from which you can obtain reliable and accurate information on small business line of credit news and trends.

Tips & Tactics

Helpful advice for making the most of this Guide

• •  If you currently have a business line of credit, it's a good idea to read the fine print of the agreement and contact your lending institution to make sure you fully understand any new regulations that could impact your business LOC agreement.

A business line of credit – ready cash anytime you need it – is a marvelous and flexible financial tool to help a small business grow and keep you in control. Establishing the revolving credit line is cheap, you only pay interest on what you borrow and you can use the line for almost anything:

1. Remodel, upgrade or expand your business into a new space.
2. Upgrade your phone system, computers or other equipment and technology.
3. Acquire extra inventory for upcoming promotions or seasonal spikes.
4. Pursue a business opportunity or cover unexpected expenses.

Business.com's "What Works for Business" blog is also a great way to keep up with the latest solutions, trends and strategies for small and medium business — including business lines of credit.

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Tap your small business banker for a business line of credit

Banks that serve small biz offer commercial lines of credit. Biggies like Wells Fargo offer small business credit lines up to $100,000 that you can apply for online, even if you're not already a customer.

I recommend: Check the business line of credit line offerings at these banks active in serving small business: Wells Fargo, Bank of America, Washington Mutual, Wachovia, Key Bank. Or for strictly web-based banking, try NetBank.

Prepare the information you'll need to borrow money

To obtain a credit line, you may need to supply financial information about your business and/or yourself to potential lenders.

I recommend: The U.S. Small Business Administration has a good section on points to consider when borrowing money for your small business via loans or lines of credit. Pay special attention to credit history and questions a bank might ask. The Work.com Guide to Building a Business Credit Rating might also be of interest.

Calculate your working capital needs

For help figuring out how big a credit line you need, use this free online calculator.

I recommend: Just plug your numbers into the Working Capital Calculator.

Look to non-banks like UPS and American Express

UPS - a big name in small biz shipping - is also a major small business lender under its UPS Capital wing, offering loans and lines of credit. And the American Express 'Open for Business' program offers business lines of credit.

I recommend: Check the case histories of how UPS Capital is helping small businesses grow and see the various small business loan solutions that are offered. The business line of credit from American Express ranges from $10,000 to $100,000 with no collateral needed. There's an easy online application and the APR is as low as prime plus 2%.

Comparison shop multiple sources

Sources of small business credit lines are numerous. To find the perfect fit and absolute best terms, you can comparison shop among many lenders.

I recommend: Enter your information at BusinessFinance or iBank – both are web portals that match lenders with small businesses, to find the best fit for your particular needs.

Need more money? SBA-backed lines to $2 million

The U.S. Small Business Administration (SBA) helps small businesses meet short-term and working capital needs through its CAPLines program. Choose from five types of credit lines, including seasonal, contract-based, builder's line, asset-based and small line.

I recommend: Visit the SBA CAPLines site for complete program details on all types of CAPLines loans and business lines of credit. Also check the types of businesses that are eligible. Local SBA web sites list lenders. Choose a state to locate the nearest district office, or just enter your zip code.

Tips & Tactics

Helpful advice for making the most of this Guide

• •  Beware of carrying 'evergreen' balances on your credit line. To keep the credit in place and your lender happy, you need to periodically pay down the debt.
• •  While you only pay interest on the portion of a credit line you use, there may be an initial setup fee and possibly an annual fee to keep it open.
• •  The key factor in obtaining a credit line will be your business cash flow.
• •  If your biz can't quality for long-term credit, ask for an 'asset-based' line.
• •  Remember, the best time to set up a credit line is BEFORE you need it.

Before contacting a lender to discuss financing options, it's best to learn about business line of credit basics. A business line of credit (LOC) is a common way for company owners to meet their short-term working capital needs. In most cases collateral is not required as long as the business owner meets all basic credit criteria.

The maximum amount of the unsecured business line of credit for which a business owner will qualify is dependent upon the company’s historical and projected annual cash flow and revenues. Consider the following tips to help you learn more about business lines of credit.

1. Research pros and cons of obtaining a business line of credit.

2. Access funds whenever needed with a business line of credit.

3. Use a business line of credit to create cash flow.

Action Steps
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Determine if a small business LOC is right for you

A business line of credit is a revolving product with no fixed terms. In most cases a business line of credit is the best option for short-term cash flow needs. For example, if you are obtaining long-term working capital or are purchasing a fixed asset, a business term loan would be a more appropriate financing tool.

I recommend: Check out Build Business Credit, a website that focuses on providing credit and other financial information to small business owners, for information on an unsecured business line of credit. Alternatively, you may consider visiting Business Finance, an online provider of unbiased financial data, to obtain information about secured business lines of credit.

Use a business credit line to finance short-term business objectives

Business owners can borrow off of the total business credit line incrementally or in one lump sum. To qualify, financial institutions will generally require a personal statement, certified business and personal tax returns for the past three years and other supplemental information that demonstrates the financial stability of your company.

I recommend: Check out Financial Web, an online provider of financial education, to obtain extensive details on small business lines of credit and other business loans products. Visit the U.S. Small Business Association website to obtain basic information about business lines of credit and how you can accurately assess your financing needs

Expand your company with a business line of credit

A business line of credit can be used to finance a range of business expenses, such as equipment or a new product or service offering. While criteria will vary by financial institution, business line of credit lenders will generally want to ensure that your company is financially sound and profitable.

I recommend: The National Federation of Independent Business (NFIB) is a non-profit organization that provides a wealth of information to small businesses on business lines of credit and other financing tools. You may also consider obtaining information from Accomodative Financial Solutions more than 140,000 lenders to ensure small businesses obtain accurate information on business lines of credit product offerings.

Tips & Tactics

Helpful advice for making the most of this Guide

• •  Be sure to watch out for high interest rates when applying for a small business LOC. While business lines of credit rates will generally be higher than business loans, they rates should be significantly lower than credit card rates.

When applying for a line of credit for a business, borrowers should understand the terms associated with such applications, including the business credit profile and the Dunn & Bradstreet ratings often used by lenders. Learn what is considered a small business and the 4 Cs of Credit. Businesses should understand these and other terms before to applying for a line of credit.

Action Steps
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Small business

A small business is generally any business with fewer than 50 employees. The United State's Small Business Administration (SBA) also defines a small business by the amount of revenue obtained. Consider these standards and the size of the business when applying for a small business line of credit.

I recommend: Visit the Small Business Administration's website to learn more about size requirements for a small business.

Credit categories, credit category

The business will be listed as one of several credit categories on a business credit report, depending on the payment behavior of the business. Other aspects, such as derogatory legal filings, may also lower the credit category for a business. The categories include acceptable, caution, warning, serious risk and bankruptcy and play a significant role in a business being able to obtain a credit line.

I recommend: Visit Experian to learn more about credit categories, including determinations for each of the categories.

Business credit profile

A business credit profile is similar to a personal credit report. It details the payment history and credit background of a business rather than an individual. When applying for a business line of credit, the business credit profile is one of the key determinants of qualifying for the loan. Lenders use past credit experience to determine creditworthiness.

I recommend: Visit AllBusiness to learn more about the business credit profile and how to establish it.

4 Cs of Credit

The 4 Cs of Credit are often used to determine a business' ability to manage credit. These include character, capacity, capital and conditions. As a business, it is important to understand how your business relates to in these areas prior to applying for a business line of credit.

I recommend: Visit Dun & Bradstreet Small Business Solutions online to understand what the 4 Cs of credit are.

Debt financing

Debt financing is the process of lending to businesses so thay can use the funds as working capital. In terms of a business owner, the lower the amount of debt financing on the books, the more promising the business looks to investors. The more debt financing the company needs to use, the less secure the business appears to be.

I recommend: Read the definition of debt financing at Investopedia.

Dun & Bradstreet ratings

Dun & Bradstreet ratings outline a business' health and credit standing. These ratings are provided to interested investors and credit lenders in the form of a report.

I recommend: Visit Dialog to learn more about what is included in these reports.