When a line fits better than a lump sum
A line of credit is a pool of money a business draws from when it needs to and puts back as customers pay. The point is flexibility. You are not sizing a single purchase; you are covering a pattern, such as paying staff on the 1st and 15th while clients pay on net-30 or net-60 terms.
If the need is one-time and clearly sized, a lump sum is usually cleaner. If it keeps returning, a line is worth looking at first.
The San Francisco pattern
Wikipedia describes San Francisco as a diversified service economy, with employment spread across professional services, tourism, financial services and high technology. Its 2016 breakdown put about 27% of workers in professional business services and 14% in leisure and hospitality. Those two groups feel cash timing in opposite ways.
- Professional and creative services: the work is billed after it is delivered, and the biggest cost, salaries, is paid before the client's payment arrives.
- Hospitality and tourism: payroll and food costs are steady, but revenue follows visitor traffic and event weeks.
Who tends to draw on a line
| Business | Typical reason to draw | What brings it back |
|---|---|---|
| Design or marketing studio | Payroll before a client pays a large invoice | The client payment |
| Neighborhood restaurant or cafe | A slow stretch between busy periods, or a stock order | Returning sales |
| Specialty retailer | Buying inventory ahead of a selling window | Sell-through |
| Contractor or facilities service | Materials and crew before a progress payment | The progress payment |
Rules of thumb that keep a line healthy
- Draw against something specific, such as a named invoice or an inventory order, so you know what repays it.
- Put the money back as soon as the customer pays rather than leaving a standing balance.
- Do not use it for a permanent loss. If the business is short every month, the answer is in the margin, not in more credit.
Related options and how to apply
If the need turns out to be one-time, look at working capital or term loans; for a specific machine or build-out, equipment financing. The San Francisco funding overview shows the full range.
We consider FICO scores of 500 and above, ask for about three months of business bank statements, and need no tax returns. The application takes about five minutes with a soft credit pull. Funding runs from $25,000 to $5,000,000 and can arrive in as little as 24 hours. Sole proprietors can apply. Start here.