Lines of Credit

Three Things:

Most owners wait until they need more credit to start preparing for it. That’s usually when leverage shifts to the bank.

1. Clean up your financial narrative

Before you ask for a larger facility, make sure your financials tell a clear, consistent story. That means timely statements, normalized earnings, and a clean separation between business and personal activity. Lenders aren’t just reading numbers—they’re assessing credibility. If they have to interpret or question your reporting, you’ve already lost ground.

2. Understand your borrowing base and constraints

Know exactly what drives your current limit—receivables, inventory, cash flow, or a mix. Then pressure-test it. Are AR aging issues capping availability? Is inventory turning slower than the bank prefers? Fixing these ahead of time increases capacity without renegotiation. Walking in with that insight shows you understand how the bank underwrites your business.

3. Get ahead of covenants and structure

Don’t wait for the bank to propose terms. Review your current covenants and where you’re trending. If growth or seasonality will strain them, address it early. Also think about structure—line vs. term debt, amortization, and reporting requirements. The right structure gives you flexibility, not friction.

Preparation changes the conversation. You move from asking for more to showing why it makes sense. That’s how better decisions get made—and how businesses stay resilient.