Business Line of Credit
Flexible revolving credit designed for businesses that need working capital on demand. Draw what you need, pay interest only on what you use, and repay to access again.
How It Works
A business line of credit gives you access to a revolving pool of capital that you can draw from as needed. Unlike a traditional term loan where you receive a lump sum upfront, a line of credit lets you take only what you need, when you need it.
You pay interest only on the amount you've drawn, not your total credit limit. As you repay, your available credit replenishes, giving you ongoing access throughout the term.
Key Features
Credit Limits
$25,000 to $500,000 typical range based on business revenue, time in business, and creditworthiness.
Terms
6 to 24 months typical. Some lenders offer ongoing renewal options.
Interest Rates
APR typically ranges from 12% to 45% depending on risk profile and lender.
Repayment
Weekly or monthly interest payments. Minimum payment schedules vary by lender.
Draw Period
Access funds immediately via ACH transfer, typically within 1 business day.
Fees
Origination fees, draw fees, and maintenance fees may apply. All disclosed upfront.
Best Use Cases
- Seasonal cash flow gaps: Cover payroll and inventory during slow seasons
- Project-based expenses: Fund materials and labor before client payment
- Inventory purchases: Stock up for peak demand without depleting reserves
- Emergency expenses: Handle unexpected repairs or opportunities
- Marketing campaigns: Launch time-sensitive initiatives without long-term debt
Qualification Requirements
Minimum Criteria
- At least 6 months in business (12+ months preferred)
- Minimum monthly revenue of $10,000
- Personal credit score of 600+ (higher scores get better terms)
- No active bankruptcies or tax liens
- Bank statements showing consistent cash flow
Documentation Needed
- 3-6 months of business bank statements
- Driver's license or ID
- Voided business check or bank account details
- Business formation documents (if entity)
Advantages vs. Disadvantages
Advantages
- ✓Pay interest only on drawn amounts
- ✓Revolving access throughout term
- ✓Fast approval and funding
- ✓No collateral required in many cases
- ✓Builds business credit when used responsibly
Disadvantages
- ×Higher rates than term loans or SBA
- ×Shorter terms than traditional loans
- ×May require personal guarantee
- ×Can be tempting to over-borrow
- ×Some lenders charge draw or maintenance fees
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