Why owners under-use it

A line of credit is most valuable before you need it. Because you only pay interest on what you draw, an unused line costs you little — but you can't open one during a crisis, because that's exactly when underwriting says no. The businesses that handle cash crunches well usually opened a line during a good quarter.

Two very different tiers

Bank and SBA lines want 700+ credit, two or more years in business, tax returns and financials, and take weeks — but they're the cheapest and offer the highest limits. Online and alternative lines start around 600 credit and one year in business, fund in days, and cost more. Being declined by a bank doesn't mean you don't qualify anywhere; it means your file fits a different tier.

What to watch in the terms

Draw fees on every advance, maintenance or non-use fees, whether the rate is variable, and how quickly the available balance replenishes as you repay. A line with a low headline rate and a 2% draw fee used monthly is not cheap.