Business Lines of Credit
A revolving limit a business can draw from as needed, often used for short-term or recurring cash flow gaps.
Program overview
A business line of credit establishes a maximum credit limit the business may draw against, repay, and in many cases draw against again during the draw period.
How it works
- The provider approves a credit limit.
- The business draws only what it needs.
- Interest and fees generally apply to drawn amounts, per the agreement.
- Availability may replenish as balances are repaid, depending on the product.
Common uses
- Seasonal cash flow
- Inventory purchases
- Payroll timing gaps
- Unexpected expenses
Who may be a good fit
- Businesses with fluctuating or seasonal cash flow
What you may need
- Business bank statements
- Business tax returns
- Personal tax returns
- Year-to-date profit and loss statement
- Balance sheet
- Business debt schedule
- Government-issued identification
- Business formation documents
Potential advantages
- Draw only what you need
- Reusable during the draw period
- Useful for timing gaps
Potential drawbacks
- Rates and fees can vary significantly by provider
- Limits may be lower than a term loan for the same business
Application process
- Assess your recurring cash flow gap
- Prepare bank statements and financials
- Apply and review offer terms carefully
- Activate the line and draw as needed
General qualification considerations
- Revenue consistency
- Time in business
- Bank account activity
- Owner credit profile
Alternatives to consider
Business Term LoansA lump sum repaid over a set period, commonly used for defined projects and one-time investments.Working Capital FinancingShorter-term financing used to cover day-to-day operating needs rather than long-term assets.Invoice FinancingFinancing tied to outstanding customer invoices, commonly used by businesses that bill other businesses.
Frequently asked questions
Is a line of credit better than a term loan?
Neither is universally better. Lines of credit tend to suit recurring, variable needs, while term loans tend to suit defined one-time projects.
This is preliminary information, not an eligibility determination, offer, or approval. Final eligibility, terms, rates and approval are determined by the applicable financing provider.