Business Lines of Credit
Revolving capital you draw on when you need it, pay down when you don't. The most flexible debt instrument for managing day-to-day business uncertainty.
What is business lines of credit?
A business line of credit (LOC) is a revolving credit facility that lets you draw funds up to an approved limit, pay them back, and draw again — much like a credit card, but typically with lower rates and structured around business cash flow.
Lines of credit are best suited for ongoing or unpredictable working capital needs: bridging seasonal swings, funding inventory turns, covering payroll between receivables, or seizing time-sensitive opportunities. You only pay interest on what you've drawn, not on the full credit limit.
Lines of credit come in two flavors: unsecured (no collateral, smaller limits, faster underwriting) and secured (backed by AR, inventory, or other assets — larger limits, lower rates, more underwriting).
How it works
- 1
Apply and get approved for a credit limit
Provide financials, bank statements, and credit info. Lender approves a maximum credit line.
- 2
Draw funds as needed
Pull money via online portal, ACH, or check whenever you need it. Funds typically arrive in your account same-day or next-day.
- 3
Repay on a schedule
Most lines have monthly minimum payments based on the outstanding balance. You can also pay down faster with no penalty.
- 4
Re-draw the credit as it's freed up
As you pay down the balance, the credit becomes available to draw on again.
Key details
Qualifications
- 1+ year in business typical (6 months for some lenders)
- $15,000+ in monthly revenue
- Personal credit 600+ for most lenders, 660+ for best terms
- Time in business and revenue trends matter as much as credit score
Pros and cons
Pros
- Pay interest only on what you draw
- Re-usable — pay down and draw again as needed
- Best tool for unpredictable working capital needs
- Strengthens balance sheet (available credit signals strength)
- Often the cheapest non-SBA capital available
Cons
- May have draw fees, maintenance fees, or unused-line fees
- Requires discipline — easy to over-draw and rack up interest
- Underwriting is more involved than working capital advances
- Some lines are 'demand' — bank can call them back
How it compares
Side-by-side comparison of small business funding options.
| Product | Speed | Cost | Term | Best for |
|---|---|---|---|---|
| SBA 7(a) | 30–90 days | Prime + 2.25–4.75% | Up to 25 yrs | Largest, lowest-cost capital |
| Business Line of Credit | 1–3 weeks | 8–25% APR | Revolving 1–3 yrs | Ongoing flexibility |
| Term Loan | 1–2 weeks | 10–30% APR | 1–10 yrs | One-time investments |
| Working Capital | 1–3 days | 1.10–1.40 factor | 3–18 mo | Speed and minimal docs |
| MCA | Same day–48 hrs | 1.15–1.50 factor | 3–12 mo | Lowest credit / fastest funding |
| Equipment Financing | 1–7 days | 7–25% APR | Useful life of asset | Equipment-secured purchases |