Ryan Weber considered himself a prudent business owner. He borrowed $6,000 from family members to start Radiant Photography in Las Vegas, and he paid them back--with interest--in three years. To cut expenses, he rented a studio when he needed it, instead of building his own. And when Advanta, a credit card company in Spring House, Penn., offered a business credit card with a $7,500 line of credit, he accepted it.

"Having $7,500 in reserve really helped," Weber says. "In case a check didn't go through from a client, it was there to rent studio lights or pay my cell phone bill."

Then last spring--a few months before  declaring bankruptcy--Advanta pulled the credit lines of 1 million small-business customers, including Weber. It also capped their credit cards at the level of their outstanding balances, effectively cutting off their access to emergency cash.

"I was suddenly working without a safety net," he says. Like many small-business owners, he depends on timely payments from clients to pay his own bills. But in this economy, invoices are stretching to 60 days or longer. "My wife and I are paying the mortgage on our home and making payments on one car," Weber says, "and we have a 6-month-old daughter. Some months, I receive $5,000 from a single commercial client; other months I'm lucky to get two checks from magazines for $400 each. It's very stressful trying to meet our monthly costs with no backup funding."  

Millions of small-business owners are suffering through the same predicament--and worse--as unprecedented numbers of banks pull back or cancel credit lines. In the first six months of last year, 38 percent of small businesses reported a decrease in their lines of credit or credit card limits, according to the National Small Business Association. More than 40 percent of small-business owners who had requested extensions of their credit lines were turned down, the National Federation of Independent Business reported, and many of those who received extensions were required to increase collateral, pay higher interest rates and/or agree to more stringent terms.

"A few years ago, losing a line of credit was a crisis--today, it's the new normal," says Marilyn Landis, a board member of the NSBA in Washington, D.C. "We business owners have burned through our personal savings, seen our credit card limits go down as our interest rates go up, and now our bankers are taking away our credit lines. But we still have customers who will pay us in 30 days and employees who expect to be paid every two weeks."

"I was suddenly working without a safety net," he says. Like many small-business owners, he depends on timely payments from clients to pay his own bills. But in this economy, invoices are stretching to 60 days or longer. "My wife and I are paying the mortgage on our home and making payments on one car," Weber says, "and we have a 6-month-old daughter. Some months, I receive $5,000 from a single commercial client; other months I'm lucky to get two checks from magazines for $400 each. It's very stressful trying to meet our monthly costs with no backup funding."  

Millions of small-business owners are suffering through the same predicament--and worse--as unprecedented numbers of banks pull back or cancel credit lines. In the first six months of last year, 38 percent of small businesses reported a decrease in their lines of credit or credit card limits, according to the National Small Business Association. More than 40 percent of small-business owners who had requested extensions of their credit lines were turned down, the National Federation of Independent Business reported, and many of those who received extensions were required to increase collateral, pay higher interest rates and/or agree to more stringent terms.

Do you want to start a new business, or would it be better to buy an already established one?

Starting a new business requires a great deal of time and money. You’ll need to research the market, raise finance, establish contacts, find a location and maybe hire new staff. 

Buying an established business, or a franchise, has the advantage that operations are already in place. The premises and stock, customer base, suppliers and income stream are already established. 

State governments can help you with information and guidance on assessing business opportunities. Also consider seeking advice from professional business advisers or your solicitor or accountant.

Millions of small-business owners are suffering through the same predicament--and worse--as unprecedented numbers of banks pull back or cancel credit lines. In the first six months of last year, 38 percent of small businesses reported a decrease in their lines of credit or credit card limits, according to the National Small Business Association. More than 40 percent of small-business owners who had requested extensions of their credit lines were turned down, the National Federation of Independent Business reported, and many of those who received extensions were required to increase collateral, pay higher interest rates and/or agree to more stringent terms.

"A few years ago, losing a line of credit was a crisis--today, it's the new normal," says Marilyn Landis, a board member of the NSBA in Washington, D.C. "We business owners have burned through our personal savings, seen our credit card limits go down as our interest rates go up, and now our bankers are taking away our credit lines. But we still have customers who will pay us in 30 days and employees who expect to be paid every two weeks."