Unpopular opinion - Skip the revolving line of credit, go for as much permanent working capital as they will give you instead.

During my ten years as an SBA lender at the large corporate national bank, I would give every business acquisition client an SBA express revolving line of credit in companion with their SBA 7a acquisition loan. I thought it was a good idea, and the bank pressed us to do it as their entire revenue plan was built around “share of wallet” meaning the more products we sold a borrower the more difficult it would be for them to leave.

Turns out over time each and every line of credit turned “evergreen” meaning the balance would go up year after year and the line would sit maxed out and have to be termed out. This happened so much that toward the end of my tenure the bank changed the structure of their SBA Express credit line product to be a revolver for 5 years and then automatically switch to a term loan for the remaining 5 years of the maximum 10 year term.

When I became a business owner, I too took the SBA express credit line. They gave me $150k to start. Had to have it increased to $350k after two years. Now 5 years in and my balance is $340k. At 11.25% it’s a large interest expense that I shouldn’t have.

Bottom line, go get an American Express card immediately. You are forced to pay it off every month, and you get to play the points game.

The SBA express credit line is just too easy to take a draw and do whatever with it. Like purchasing equipment at the end of the year because your CPA says you need depreciation, or replacing all the heating units in the warehouse because your staff doesn’t want to wear coats etc, etc.