A Business Line of Credit for Flexible Access to Capital

A business line of credit is a revolving commercial credit facility. The business can draw up to an approved limit, repay the balance and generally reuse available credit during the facility period. Costs are commonly based on the amount drawn, but fees, draw requirements and renewal terms vary by provider.

• Seasonal purchases.
• Inventory and supplies.
• Short-term payroll gaps.
• Emergency repairs.
• Marketing campaigns.
• Recurring project costs.

1. ApprovalA provider approves a credit limit and agreement.
2. DrawThe business requests a draw, subject to availability.
3. RepayPayments are made according to the draw terms.
4. ReuseRepaid principal may become available to draw again.

• Approved limit and minimum draw.
• Interest or financing charge.
• Origination, maintenance, draw and inactivity fees.
• Draw-specific repayment schedule.
• Renewal and review requirements.
• Personal guarantee or lien requirements.

Is a line of credit better than a term loan?

It depends on the use. A line can be useful for recurring needs, while a term product may better match a defined one-time investment.

Do I pay for the entire approved limit?

Generally, costs apply to amounts drawn, but maintenance or other fees may apply even when no balance is outstanding. Review the agreement.

Can the provider reduce the available limit?

Some agreements allow providers to review, suspend or reduce availability based on performance or other conditions.

Can a business with bad credit qualify?

Possibly. Providers may review business revenue, deposit history, time in business and credit. Standards vary.

How quickly can I access a draw?

Timing varies by provider and whether the facility is already active. Initial approval may require more review than later draws.

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