Business Lines of Credit

A business line of credit is revolving capital: draw what you need, pay interest only on what is drawn, repay, and draw again. Limits for young businesses start around $10,000-$50,000 at banks and online lenders, against the business file, revenue, and usually a personal guarantee.

Why it matters

A line is the right shape for uneven cash flow - inventory, payroll gaps, seasonal swings - where a lump-sum loan would charge you interest on money sitting idle.

Key facts

• Bank lines offer the lowest rates but want 2+ years in business and strong financials; online lenders move faster at higher cost.
• Interest accrues only on the drawn balance; some lines add draw fees or unused-line fees instead.
• Lines are reviewed annually - a deteriorating file can shrink or freeze the line at renewal.
• A line used to 90% reads like a maxed card: keep drawn utilization moderate when you are not actively deploying it.

In practice

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