A business line of credit gives you access to a pool of capital you can draw from and repay repeatedly — like a business credit card but with higher limits and lower rates. You only pay interest on what you actually use, making it one of the most cost-effective tools for managing working capital.
Definition
Business line of credit (also: revolving credit line): A revolving credit limit you draw from as needed, repay, and draw from again. You pay interest only on the amount you have drawn.
See all business financing definitions| Financing type | Business Financing |
|---|---|
| Typical amounts | Term loans $25K–$2M; equipment financing $10K–$500K |
| Decision time | As fast as 24 hours |
| Credit | All credit profiles considered; soft credit pull to start |
| Cost to apply | Zero cost to apply |
| Who we are | A business financing broker. We compare offers from our lender network; we are not a direct lender. |
In detail
Once approved, you access your line through the lender's portal or business checking account. You can draw any amount up to your credit limit at any time. Repayment is typically structured as interest-only monthly payments on the outstanding balance, with principal repayment as you choose. Once repaid, the credit becomes available again — hence revolving.
In detail
Business lines of credit typically require 1+ year in business, $100,000+ in annual revenue, and 620+ FICO. Some lenders approve from 580+ for smaller limits. The line renews annually — the lender reviews your current financials at renewal to maintain or adjust the limit.
In detail
Lines of credit are best for recurring, unpredictable, or seasonal needs — payroll bridging, covering receivables gaps, stocking seasonal inventory, or handling unexpected expenses. If you know the exact amount you need for a specific purpose and will not need ongoing access, a term loan is usually cheaper.
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Business line of credit
Loan vs. line of credit
Working capital
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Yes. As you repay drawn amounts, that capacity becomes available again. If you draw $50,000 from a $100,000 line, you have $50,000 available. Repay $25,000 and you have $75,000 available again. This revolving feature is what makes it valuable for ongoing working capital management.
Rates vary widely: 8–25% APR for prime borrowers with strong credit and established businesses. Challenger credit or younger businesses may see 25–50%+ effective rates on shorter-duration lines. Always calculate the total cost of capital based on your actual expected draw amount and repayment timeline.
Common fees include an annual maintenance fee ($150–$500), a draw fee (flat amount per draw, typically $50–$150), and potentially an unused line fee (0.25–0.5% of unused capacity annually). Always read the full fee schedule before accepting a line of credit offer.
Lenders typically look at time in business, monthly revenue, credit and recent bank activity. Requirements vary by lender and limit, and larger lines usually need stronger numbers, so compare more than one offer before you apply.
It depends on your credit, time in business, revenue and the lender. Interest is charged only on the amount you draw, but also compare fees, such as annual renewal or draw fees, and the APR rather than the headline rate.
Written by lendfloCapital Editorial Team · Last updated
lendfloCapital is a business financing broker, not a lender. This page is general information, not financial, legal or tax advice. Rates, amounts and terms depend on the lender and your business.
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