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One of the more challenging things to find in today’s rough and tumble economy is finding a good source of unsecured business lines of credit. What are unsecured business lines of credit?

Lines of credit function very similarly to credit cards, except that they are issued by banks. The banks offer a credit account that you connect to directly via a checkbook, and have a limit that is comparable to the limits of credit cards. Because these are issued by banks, they are incredibly similar to checking accounts, and often have a nearly identical feel to them.

In order to be approved for a line of credit, you need to have something to secure it; this is often some form of property collateral, and unsurprisingly, the most common form of credit line is the home equity line, which is based on the equity that exists in one’s house. Business lines of credit are actually often secured similarly; it is very common for business lines of credit and other forms of business financing to be secured with the property holdings that are owned privately by the members.

Getting unsecured business lines of credit, then, is quite a challenging thing indeed. These lines are not anchored by anything concrete, and will often require a very high credit score to be acceptable for loan purposes. The best place to go for one of these credit lines is at a small bank or a credit union. Contrary to popular belief, large banks often have interest rates that are very high, and tend to not be very consumer-friendly. Smaller banks, by contrast, tend to put you in a position where you will be heard by someone with higher rank in the decision-making process, and will give you a better chance to sell your pitch. They also (and so do credit unions) have a tendency to offer you a very low interest rate simply by virtue of the fact that they have much lower overhead, including even a lack of profit margins.

It is small banks and credit unions that will offer you the business credit building opportunities that you need. Check with your local chapters to see exactly what your options are.

This Business article was written by Mark Karavan on 2/9/2010