7 Best Ways to Use a Business Line of Credit

A business line of credit (LOC) is one of the most flexible financing options available to small business owners. Unlike a traditional loan, which provides a lump sum of cash upfront, a business line of credit allows companies to borrow only what they need, when they need it—up to a set credit limit. Businesses can repay the borrowed amount and access funds again, making it a revolving form of credit similar to a business credit card but typically with lower interest rates and higher borrowing limits.

For small businesses, cash flow fluctuations, unexpected expenses, and growth opportunities can create financial strain. A business line of credit helps bridge these gaps by providing quick access to capital without the lengthy approval process of traditional loans. Whether it’s covering short-term operational costs, purchasing inventory, or funding a marketing campaign, a business line of credit can be a valuable tool when used strategically.

In this guide, we’ll explore the seven best ways to use a business line of credit, helping small business owners maximize financial flexibility while maintaining responsible borrowing habits.

1. Covering Short-Term Cash Flow Gaps

For many small businesses, inconsistent revenue cycles can create temporary cash flow shortages. Whether due to seasonal fluctuations, delayed client payments, or unexpected slow periods, a business line of credit can serve as a financial cushion to keep operations running smoothly.

Unlike a term loan, which provides a fixed lump sum, a business line of credit allows businesses to borrow only what they need to cover short-term expenses and repay it when revenue stabilizes. This flexibility helps businesses avoid cash flow disruptions without taking on unnecessary debt.

Example: A Retail Business Preparing for Peak Season

A small clothing boutique experiences slow sales during the summer months but sees a major revenue spike during the holiday season. To prepare for this busy period, the owner needs to purchase additional inventory in advance. Instead of depleting cash reserves, they use a business line of credit to buy inventory upfront, ensuring they can meet customer demand. Once holiday sales pick up, they repay the borrowed amount, restoring their credit line for future use.

Key Benefits

Even profitable businesses can experience temporary cash shortages due to delayed payments or seasonal slowdowns. A business line of credit provides a flexible safety net, allowing businesses to cover short-term expenses without disrupting operations.

• Helps bridge revenue gaps without disrupting business operations.
• Provides quick access to working capital without lengthy loan approvals.
• Allows businesses to cover short-term expenses while waiting for payments from customers or clients.

2. Managing Payroll During Slow Periods

Payroll is one of the most critical expenses for any business. Employees rely on timely paychecks, and any disruption in payroll can lead to low morale, high turnover, and operational issues. However, businesses with seasonal demand or unpredictable revenue cycles may struggle to cover payroll during slow periods.

A business line of credit provides a short-term funding solution to ensure employees are paid on time, even when revenue is temporarily lower than usual. By using an LOC strategically, businesses can maintain workforce stability without dipping into emergency reserves.

Example: A Restaurant Covering Payroll in the Off-Season

A family-owned restaurant experiences a slowdown during the winter months but remains fully staffed to prepare for the busy summer season. Since revenue temporarily declines, meeting payroll becomes a challenge. Instead of reducing staff or delaying payments, the restaurant owner uses a business line of credit to cover payroll for two months. When summer arrives and revenue increases, they repay the borrowed amount.

Key Benefits

Payroll disruptions can hurt employee trust and lead to staffing issues. Using a business line of credit ensures that wages are paid consistently, helping businesses retain their workforce and avoid unnecessary turnover.

• Helps maintain payroll stability even during seasonal slowdowns.
• Prevents employee dissatisfaction and turnover due to late paychecks.
• Allows businesses to retain key staff members without cutting hours or positions.

3. Purchasing Inventory & Supplies

Keeping inventory stocked and supplies readily available is essential for business continuity, but purchasing in bulk or replenishing stock can strain cash flow—especially when demand fluctuates. A business line of credit provides a flexible financing option that allows businesses to buy inventory as needed without disrupting their cash reserves.

Instead of waiting for customer payments or peak sales periods, businesses can use an LOC to secure bulk discounts, take advantage of supplier deals, and keep operations running smoothly.

Example: A Small Manufacturer Restocking Materials

A small furniture manufacturer receives a large order from a new client but needs to purchase raw materials upfront before production can begin. Since the payment terms require the client to pay 30 days after delivery, the manufacturer uses a business line of credit to buy materials immediately. This allows them to fulfill the order on time without waiting for existing cash flow to catch up. Once the client payment arrives, the LOC is repaid.

Key Benefits

Having the ability to purchase inventory and supplies when needed ensures businesses can meet customer demand and take advantage of cost-saving opportunities.

• Helps maintain steady inventory levels to avoid stock shortages.
• Allows businesses to purchase in bulk and take advantage of supplier discounts.
• Provides flexibility to fulfill large orders or meet seasonal demand without straining cash flow.

4. Handling Unexpected Expenses or Emergencies

No matter how well a business plans, unexpected expenses can arise at any time. Equipment breakdowns, emergency repairs, sudden legal fees, or even economic downturns can put immediate strain on cash flow. A business line of credit provides quick access to capital, allowing business owners to handle urgent expenses without disrupting daily operations or dipping into savings.

Instead of scrambling for funds or applying for a loan in an emergency, businesses with an active LOC can draw funds immediately to cover costs and repay them when finances stabilize.

Example: A Retail Store Repairing a Broken HVAC System

A small retail boutique experiences an HVAC system failure in the middle of summer, making it uncomfortable for customers and employees. Repair costs are unexpectedly high, and paying out of pocket would deplete the store’s cash reserves. To keep the store open and maintain customer traffic, the owner uses a business line of credit to cover the repair costs immediately. The expense is repaid gradually as revenue continues to flow in.

Key Benefits

A business line of credit acts as a financial safety net, ensuring businesses can handle unexpected expenses without financial setbacks.

• Provides immediate access to funds for emergencies without loan delays.
• Helps businesses avoid operational disruptions caused by unexpected repairs or expenses.
• Prevents cash flow issues by spreading out payments over time instead of paying a large lump sum.

5. Investing in Marketing & Advertising

Effective marketing is crucial for business growth, but advertising campaigns, branding efforts, and digital marketing strategies require upfront investment before they generate returns. A business line of credit allows businesses to fund marketing initiatives without waiting for extra cash flow, ensuring they can attract new customers and increase revenue over time.

Whether it’s running paid ads, launching a seasonal promotion, or rebranding, an LOC provides flexibility to invest in marketing efforts while maintaining operational stability.

Example: An E-Commerce Business Running a Holiday Ad Campaign

An online boutique wants to capitalize on holiday shopping trends by launching a targeted social media ad campaign. However, ad costs must be paid upfront, and the business won’t see immediate returns until sales pick up. Instead of pulling from working capital, the owner uses a business line of credit to fund the campaign, increasing exposure and boosting holiday sales. Once the revenue comes in, the LOC is repaid.

Key Benefits

A business line of credit allows businesses to invest in marketing when it matters most, helping them stay competitive and drive sales.

• Provides funding for ad campaigns, branding, and promotions without upfront cash strain.
• Helps businesses capitalize on seasonal trends and limited-time marketing opportunities.
• Allows businesses to scale marketing efforts without disrupting cash flow.

6. Expanding Operations or Taking on New Projects

Business growth often requires additional funding to cover expansion costs, whether it’s hiring new employees, upgrading equipment, or expanding to a second location. However, securing a large-term loan for smaller growth initiatives may not always be necessary. A business line of credit provides a flexible solution to fund expansion efforts incrementally, allowing businesses to scale at their own pace without taking on excessive debt.

By using an LOC for targeted expansion projects, businesses can increase revenue potential while maintaining financial stability during the growth phase.

Example: A Consulting Firm Hiring Additional Staff

A growing consulting firm lands a large corporate client but needs to hire additional consultants to manage the workload. Since the contract payments are scheduled over several months, the firm uses a business line of credit to cover payroll for new hires upfront. As revenue from the contract starts flowing in, the LOC is repaid, ensuring smooth expansion without cash flow interruptions.

Key Benefits

A business line of credit allows businesses to scale operations strategically, ensuring they have the resources needed for growth without financial strain.

• Helps businesses expand incrementally instead of taking on large loans.
• Provides immediate funding to hire staff, upgrade equipment, or expand operations.
• Ensures businesses can take on new opportunities without waiting for cash reserves to grow.

7. Taking Advantage of Business Opportunities

In business, timing is everything—and the ability to act quickly on limited-time opportunities can provide a significant competitive advantage. Whether it’s securing a bulk inventory discount, acquiring new equipment at a reduced price, or jumping on a prime real estate lease, having immediate access to funds can make all the difference. A business line of credit allows companies to capitalize on these opportunities without waiting for cash flow to catch up.

Rather than missing out due to funding delays, businesses can borrow what they need, seize the opportunity, and repay the LOC as revenue grows.

Example: A Coffee Shop Securing a Second Location

A popular coffee shop has been considering expansion, but rental costs in high-traffic areas are steep. Suddenly, a prime retail space becomes available at a discounted lease rate, but the owner must act fast before another business secures it. Instead of waiting to save up capital, they use a business line of credit to cover the initial lease deposit and renovations. Once the new location is up and running, profits from both locations help repay the LOC.

Key Benefits

A business line of credit provides the financial flexibility to move quickly, ensuring businesses don’t miss out on growth opportunities due to cash flow constraints.

• Enables businesses to take advantage of limited-time vendor discounts, real estate deals, or bulk purchasing opportunities.
• Allows companies to act fast without needing to secure long-term financing.
• Helps businesses stay competitive by investing in expansion, equipment, or strategic partnerships at the right time.

Apply for a Business Line of Credit in Minutes with SBG Funding

Need fast, flexible financing? A business line of credit from SBG Funding can help you cover expenses, seize opportunities, and keep your business moving forward. We provide fast, hassle-free financing solutions tailored to your needs.

Why Choose SBG Funding?

• Fast Approvals: Get a decision within 24 hours and access funds the same day.
• Flexible Credit Lines: Borrow between $5,000 and $1 million with terms up to 24 months.
• Competitive Rates: Enjoy rates starting at 1% per month, with no prepayment penalties.

How to Apply

1. Complete a Quick Online Application: Apply in just minutes.
2. Get a Fast Decision: Receive a response within 24 hours.
3. Access Your Funds Immediately: Get the capital you need the same day upon approval.

Applying won’t impact your credit score—our streamlined process ensures fast, stress-free funding for your business.

Get Started Today

Visit our Business Line of Credit page to learn more or apply now in minutes. Give your business the financial flexibility it needs—partner with SBG Funding today.