Line of credit
Business line of credit
A line of credit is an amount you can draw on, repay, and draw on again. You pay for what you use rather than for the whole facility. It suits a need that comes and goes — payroll in a slow month, stock before a busy season, the gap while you wait to be paid.
قد تُغلق المعاملات المؤهلة خلال 3 أيام.
على ملف مكتمل وسند نظيف.
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How a line of credit works
You are given a limit rather than handed a sum. Draw what you need, repay it, and the room comes back. That revolving quality is the entire point, and it is what a term loan cannot do.
Because it is there before you need it, the useful time to arrange one is when the business is doing well — not in the week you are short. Lenders underwrite the business as it stands, and a business under pressure is a harder file than the same business three months earlier.
Read how the facility is reviewed. Lines are usually renewed or re-underwritten periodically, and some can be reduced or withdrawn. Ask what triggers a review before you build a cash-flow plan around it.
What lenders look at
Revenue consistency
Not just the total, but whether it is steady. A revolving facility is underwritten against a pattern more than a peak.
Bank account behaviour
Average balances, negative days and overdrafts. This tells a lender how you actually run the business.
Time in business
Lines are generally harder for a very new business than a term loan or equipment financing is.
Credit
Personal and business both, and it tends to matter more here than on asset-backed products.
Existing lines and debt
What is already open, and how much of it you are currently using.
Seasonality
A seasonal business is not a problem — but the lender wants to see you know the pattern and have planned around it.
Receivables
Who owes you and how reliably they pay. On some facilities this is the basis of the whole thing.
Utilisation
How much of an existing line you routinely use. A line permanently drawn to the limit reads as a term loan in disguise.
Questions we get asked
Do I pay for it if I do not use it?
It depends on the facility. Some carry a fee whether or not you draw; others do not. Ask this specifically — it is one of the questions people forget until it appears.
How is this different from a business loan?
A loan is one amount, once, on a schedule. A line is a limit you draw on, repay and draw on again. Match it to whether your need happens once or repeatedly.
Can the lender reduce or cancel it?
Some facilities are reviewed periodically and can be reduced. Ask what triggers a review before you plan your cash flow around the limit.
Should I get one before I need it?
Generally yes. A business is easier to underwrite when it is doing well than when it is under pressure.
Does drawing on it affect my credit?
It can, depending on the facility and how it reports. We will tell you what we know about a specific lender before you proceed.
Can a newer business get one?
It is a different conversation from a term loan. Other products are sometimes the better route while the business builds a record.
Is it secured?
Varies. Many are secured by a general lien on business assets plus a personal guarantee; some are tied to receivables specifically.
Who this page is for
- Businesses with uneven or seasonal cash flow.
- Owners who wait 30, 60 or 90 days to be paid.
- Contractors funding materials before a draw arrives.
- Retailers and distributors buying stock ahead of a season.
- Any owner who wants a cushion in place before it is needed.
What people use them for
- Payroll through a slow stretch.
- Inventory ahead of a busy season.
- Materials on a job before the client pays.
- Covering the gap on slow-paying invoices.
- Taking a supplier discount for paying early.
- An unplanned repair that cannot wait.
The words you will hear, in plain English
- Revolving credit
- Credit that renews as you repay it. Draw, repay, draw again — the defining feature of a line.
- Draw
- Taking money from the line. You generally pay only on what you have drawn, not on the whole limit.
- Utilisation
- The share of your limit currently in use. Lenders watch it, and a permanently maxed line is read as a warning.
- Facility fee
- A charge for having the line available whether or not you use it. Not every line has one — ask.
- Renewal or review
- The periodic re-underwriting of the line. It can confirm, reduce or withdraw the limit, so know the trigger in advance.
- Receivables
- Money owed to you by customers. Some lines are sized and secured against them specifically.
- Covenant
- A condition you agree to keep, such as a ratio or a reporting schedule. Breaking one has consequences set out in the agreement.
- Personal guarantee
- Your personal promise to repay if the business cannot. Standard on most business lines.
How a line earns its keep
Illustrative situations, to show when a revolving facility fits better than a loan. Not offers, not quotes, and not terms available to anyone in particular — products, eligibility and figures vary by lender and by business.
Waiting to be paid
A contractor who buys materials in week one and is paid in week ten. Draw to cover the materials, repay when the invoice clears, and the room is there for the next job.
A seasonal business
A retailer buying stock in the autumn for a winter season. The line funds the inventory and the season repays it — the pattern a term loan fits badly.
A cushion, arranged early
A steady business that arranges a line while trading well and does not draw on it for a year. The point was to have it before the month it was needed.
When a loan is the better answer
A one-off equipment purchase or a build-out. A fixed cost is better matched by a fixed loan; a line used that way quietly becomes expensive term debt.
What to prepare
Lines are underwritten on how the business runs, so the bank statements do most of the talking.
- Recent business bank statements
- A completed application
- Government-issued ID for each owner
- Entity papers: articles, operating agreement, EIN letter
- Business financial statements, where the lender asks
- An accounts receivable ageing report, if you invoice
- A list of existing lines, loans and advances
- Voided business cheque for funding
From application to a live line
- 1
Tell us how the money moves
Not just what you turn over — when it arrives and when it goes out. That pattern is what a line is built around.
- 2
Loan or line
If a term loan actually fits your need better, we will say so. A line used as term debt is an expensive habit.
- 3
Documents
Bank statements, entity papers, and receivables ageing if you invoice.
- 4
Underwriting
Revenue consistency, account behaviour, credit and existing facilities.
- 5
Terms and the small print
We go through fees, how draws work, and what triggers a review — the parts that matter later.
- 6
The line goes live
Draw when you need it, repay, and the room comes back.
What goes wrong
Waiting until you need it
The worst month to apply is the month you are short. Arrange it while the business is trading well.
Living at the limit
A line permanently drawn to the top is term debt with a revolving label, and lenders read it that way at review.
Not asking about fees
Some facilities charge whether you draw or not. Ask before signing, not at the first statement.
Missing the review trigger
A limit that can be reduced is not a limit you should build a cash-flow plan around without knowing the conditions.
Using it for a one-off cost
A build-out or a machine is a fixed cost. Match it with fixed borrowing.
Ignoring the receivables
If customers are paying slower than they used to, the line is treating a symptom. Fix the collection problem too.
Related financing
- Business loans →When the cost happens once and the amount is known.
- Invoice factoring →Where the problem is specifically slow-paying customers.
- SBA financing →Including SBA facilities built for working capital.
- All business funding →Start from the question rather than the product.
- Equipment financing →Keep a line free by financing machines against themselves.
Tell us about the business
Revenue, how long you have been trading, and when the money actually arrives.
الخطوة 1 من 5
الحصول على خط ائتمان للأعمال
عن عملك
ما يكفي فقط لتوجيه ملفك إلى الجهة الصحيحة.
This is not an offer and not an approval. Terms are set by a lender, in writing, after underwriting, and vary by lender, by property and by file.
See your line of credit options
Tell us how the cash flow moves through the year. If a term loan fits better, we will tell you that instead.