What Is a Business Line of Credit?
A business line of credit is a revolving credit facility that gives you access to a set amount of capital. Unlike a term loan where you receive a lump sum and repay on a fixed schedule, a line of credit lets you draw funds as needed and repay over time.
Once you repay what you've drawn, that amount becomes available again — making it ideal for businesses with recurring or unpredictable capital needs. Building strong business credit is the most reliable path to securing larger revolving limits over time.
How It Works
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1
Get Approved for a Credit Limit
After application and underwriting, you're approved for a maximum credit line (e.g., $250,000).
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2
Draw Funds as Needed
Access some or all of your available credit — transfer directly to your bank account, often within 24 hours.
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3
Pay Interest Only on Draws
You pay interest only on the amount you've drawn, not the full credit limit.
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4
Repay & Reuse
As you repay, your available credit restores — ready to draw again whenever you need it.
Best Uses for a Line of Credit
- Managing cash flow gaps between receivables and payables
- Covering payroll during slow seasons
- Purchasing inventory to fulfill large orders
- Bridging gaps while waiting on a term loan to close
- Emergency business expenses
- Taking advantage of time-sensitive supplier discounts
Qualification Requirements
- Credit score 600+
- Minimum $120,000 annual revenue
- At least 6 months in business
- No major unresolved liens
Secured vs. Unsecured Lines
| Feature | Secured | Unsecured |
|---|---|---|
| Collateral Required | Yes (assets, AR) | No |
| Typical Limit | Up to $1M+ | Up to $500K |
| Interest Rate | Lower | Slightly higher |
| Qualification | More accessible | Stricter credit requirements |
Illustrative example terms shown for demonstration only. Not an offer or guarantee of financing.