When I was growing up, my father’s business was extremely successful. We posted a positive growth rate every year, so it seemed like the business was poised for success in the long term.

Because of our consistent success, our local bank was willing to extend us a small business line of credit. With this small business line of credit, we were given access to a large amount of money.

For the first year we were required to pay off the balance of the line. The bank required this simply to make sure we could make these payments when required.

With this credit line, my father was able to make the business grow twice as fast as before.

This happened because he was no longer required to rely on his personal funds. With the aid of the credit line, we were soon one of the most successful small businesses in our local area. It seemed like we were going to have a great future ahead of us, but my father became too greedy.

Because he had access to all of these funds, he decided to open a new business in a completely different market. We had no experience in this industry, and nationwide, it was a struggling industry.

It did not seem like this would be a great business move, so despite the success of our other business, my father was not granted a loan from the bank. However, they did allow him to use our credit line to fund this new business. At the time, we did not see that this was going to come back and haunt us.

Because we decided to pull our funds out of the other business, we soon saw our main business begin to falter. With my father consistently spending his time with the newer business, our main business posted its first negative growth year.

At the time, we did not worry about this decline because we could simply use the funds from our credit line to cover our losses. Before we knew what was happening, we began to rely on our small business line of credit for everything. After another year, the bank demanded payment on the line, and of course we could not make the payments.

We tried to sell the newer business, but had no success, so we simply shut it down. Thankfully, we were able to salvage our main business, but the bank has refused to extend the line to us again.

Tags: sba business loans, small business line of credit, unsecured business credit line

This entry was posted on Tuesday, December 8th, 2009 at 12:36 pm and is filed under business loans. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.