Business Line of Credit

A flexible borrowing facility allowing draws up to a preset limit, with interest charged only on the outstanding balance. Ideal for managing cash flow gaps, seasonal inventory, and unexpected expenses. Revolving lines reset as you repay; non-revolving lines are one-time.

Installment or revolving? A business line of credit is revolving credit (the same category as a credit card): repaying a draw restores your available limit, so you can borrow again without a new application. That is the key difference from a term loan, which is installment credit paid down on a fixed schedule and closed when repaid. A "non-revolving" line is the exception: it lets you draw in pieces up to a cap, but repaid amounts do not become available again.

How draws are repaid: most lines charge interest only on what is drawn, billed weekly or monthly; some online lenders convert each draw into its own short amortizing schedule (6, 12 or 18 months), which behaves like a series of mini installment loans inside a revolving limit. Annual or monthly maintenance fees, draw fees, and inactivity fees are common, so compare the total cost of a typical draw rather than the headline rate.

Secured vs unsecured: bank lines are often secured by a blanket lien or receivables and priced lower; online lines are usually unsecured, faster to open, and more expensive. Lines typically renew annually and the lender can reduce the limit if your financials weaken. See also: revolving credit facility, term loan, draw period.