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What the Heck is an Operating Line of Credit for Your Business?


Small businesses need capital to survive especially when the economy changes. A good source of capital for cash flow in your business is an operating line of credit. An operating line of credit can help you fund daily operations in your business even when cash is a little tight. Our AVP of Commercial Lending, Alan DeWit has put together a shortlist on the benefits of an operating line of credit.

Fast Access to the Money you Need

This can be crucial for a small business. Let's say you are running a little short on payroll this month but expect a big payment from a client in the near future. An operating line can get you the cash you need to pay your employees quickly. Or, in the case that something breaks and you were not planning on the expense, an operating line can get you the cash you need, when you need it.

It is Easy to Transfer Money

While focused on the costs associated with operating your business, these type of accounts are functional lines of credit. They are usually revolving and you can draw on them at any time so it is easy to transfer the cash from your line of credit to your business checking account. It is also easy to make payments to your operating line from your business checking account. Convenience is key for a small business owner

Flexible Payments

Since an operating line is a line of credit, your payment can be more flexible than a regular loan payment. Depending on how much you draw from your operating line, your payment is reflected. The more you take the larger your payment will be, but the less you take, you guessed it; the smaller your payment will be. It is a pretty cool and a great tool for the small business owner.  

Helping With Cash Flow During Slower Months

Every business owners worst nightmare is their slow season. How do you keep employees and the lights on when you’re not bringing in enough money? You use your operating line of credit and pay it back when the business is doing really well. Flexibility is key when operating a business and your line of credit can be the key to a successful business.

You Only Pay for What You Use

Another unique property of an operating line is that you may have a ton available, but you only need to use some of it. So you only pay for what you use, not the entire available amount. It makes those payments flexible and your cash flow intact, even when you borrow against it.

Personal and Business Separation

An operating line of credit is specific to your business. It is not for use for personal expenses. While personal accounts often have a balance of charges to expenses for business-related purchases, it is easier to keep the separation with this line of credit, making your accountant happy come tax time. Keeping this account separate and only for business expenses is key to keeping your liability in check.


This is just a short list of advantages of using an operating line of credit for your business. Along with these tools, RMCU has a number of other services that can help your business get to that next level. If this sparks your interest, contact our Business Services Team to get more information. Every business has needs that are specific to their stage, their industry, and their goals. An operating line of credit is a great tool to meet your needs and help make your business venture a success. Contact us to find out how RMCU can serve you, as you serve your customers.


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