By Bill Fay,

Cash is king for every business, but especially small ones, whose very existence often hangs perilously on access to the king.

For most small business owners, that means having a line of credit, an “emergency credit card” of sorts that allows them to handle cash-flow problems or take advantage of unexpected opportunities.

The problem these days is where to find the king and his line of credit.

The most obvious place is the bank where you have a business account. That should be enough to get you an audience with a loan officer, but be prepared for a grilling that might make you feel like a hot dog on the Fourth of July.

The historically low interest rates of the last few years are great for businesses, but not-so-great for banks, which aren’t making a lot when they loan money out at 5 percent. Banks likely will seek proof that you absolutely, positively, unquestionably will not default on your line of credit before deciding whether to give you one.

Some of the things you must be prepared for include:

  • An account in good standing. There should be little or no history of bouncing checks. Positive cash flow is great.  Average daily balance might be a factor.
  • Good credit score, both personally and for the business. Businesses that take or are denied a loan are tracked and receive credit scores. Most banks require the owner to personally guarantee the line of credit, which means their personal credit score comes into play.
  • A business history, preferably one that extends beyond two years. About one in three businesses fold in less than two years. If you’ve been at it longer than that, you’re a good risk.

Unfortunately, over the last four years, 43 percent of small businesses were unable to find a lender when they needed one, according to a National Small Business Administration survey of its members. Still, there is hope. Community banks and credit unions are getting into the business of making loans to small businesses.

The best advice for seeing the king — and getting his cash — might be to apply when your business is doing well and really doesn’t need a line of credit. Establish a relationship with loan officers before you ask for a loan. Talk to them about your line of business and how successful you’ve been.

Everyone, even loan officers, wants to be around a winner.

Bill Fay is a writer for, focused mainly on news stories about the spending habits of families and government. He spent 21 years in the newspaper business and eight more in television and radio, dealing with college and professional sports, then seven forgettable years writing speeches and marketing materials for a government agency.