I have a few questions. First, how can they just pull a line of credit away from you without any prior notification and then turn that line of credit into a loan that must be paid immediately and take money from your savings account to pay off the line of credit. With good credit, why wouldn't one of the local community banks bail you out?
Now I know that they pull $hit like this all the time but in your situation I don't see how its legal, and I don't see how you would not have a legal case against them for ruining your business. unless that line of credit that you signed for had those stipulations in it.
The other question I have is, why if you have been in business as long as you have been would you grow to the point that you needed that much of a credit line or should I say that you needed to use that much of the credit line. If you were making the money you say you were making you should of accumulated enough in savings to cover material cost and payroll etc. Like you said you were not to the point that you could eliminate the bank and have the credit line as an emergency.
So it sounds like you may have made the mistake of trying to grow too large to quickly, which is the same scenario playing out again.
I understand the use of the line of credit, but I think you got used to having it and relied on it too heavily to keep the doors open. Couldn't you talk to your vendor and have them sign a release relieving the company you did the work for from any liability with the promise of paying them when you get paid? Or have them come with you when you pick up the check and cash it and then pay the vendor. I'm sure you could work something out so the customer pays you.
I'm not saying your not telling the truth about everything, but something don't smell right.