Lines of credit
How does a business line of credit work?
A business line of credit is a revolving facility that lets a business draw funds up to an approved limit, repay what it uses, and draw again — with interest or fees generally charged only on the amount outstanding.
Lines can be secured by business assets or unsecured, and are offered by both banks and non-bank providers. Unsecured lines from non-bank providers are often faster to access but may carry higher cost; secured lines from banks typically offer lower rates but require more documentation, collateral and a longer approval process.
Availability, credit limits, draw periods and renewal requirements vary widely by provider and by the business’s financial profile, time in business and revenue. Some lines are structured to automatically renew with continued qualifying activity; others require periodic re-underwriting.
Commonly explored when
- Cash needs are recurring but irregular in timing or amount
- The business wants capacity in place before it’s actually needed
- Bridging short-term gaps rather than funding one large, one-time purchase