Line of credit

Taking out a line of credit is how many small business owners are able to start their new company. A line of credit is the amount that a business owner can borrow. The money can be accessed by check, ATM, or debit card. The owner is required to make monthly payments on the amount borrowed.

I recommend: Small Business Notes discusses what a line of credit is.

Small business banker

A small business banker is the person to seek when you want a small business loan or line of credit. A small business banker specializes in these services.

I recommend: Export Finance Guide describes the usefulness of a small business banker.

Underwriting

Underwriting is the process of determining whether a business is worthy of a loan or line of credit. The decision is usually made with certain underwriting requirements in mind, such as assets, credit history, and income.

I recommend: Wachovia defines underwriting in its glossary of terms.

Open-ended credit account

Also known as revolving credit, an open-ended credit account is the type of account associated with a line of credit. Lenders that offer open-ended credit accounts expect borrowers to make repeated transactions up to their credit limit.

I recommend: FinWeb.com explains the idea behind an open-ended credit account.

Cash advance

Cash advance refers to money that one can take from a line of credit. Rather than using their credit card to make a purchase, borrowers can get cash from an ATM. This should only be used in emergencies in most cases, as fees and interest rates are usually higher than regular rates.

I recommend: InvestorWords.com defines the cash advance term relating to a line of credit.

Transaction fee

A transaction fee is a fee you might be charged when you make a specific type of transaction on your small business line of credit. A line of credit with fewer, lower fees is the most desirable, but usually requires good credit.

I recommend: The Federal Reserve Board defines transaction fees when it comes to a line of credit.