How is a line of credit different from a term loan?

A term loan gives you one lump sum that you repay from day one, whether you use it all or not. A line of credit lets you borrow only what you need, when you need it, and pay interest only on the drawn amount.

What does a line of credit cost?

Costs vary widely by lender and limit. Smaller, fast-funding lines often price as a factor rate, while bank and SBA-backed lines behave more like traditional interest. Comparing the total cost of what you'll actually draw is the number that matters.

Business Lines of Credit

How it works

The lender approves a maximum credit limit, and you draw from it as needed — repaying either on a set schedule or by revolving the balance like a credit card. Interest is charged only on the amount you've drawn, and repaid funds are often available to borrow again.

Who it's best for

Businesses smoothing out seasonal cash flow
Covering payroll, inventory or a surprise expense
Companies that want capital on standby without taking a lump-sum loan

What lenders look at

Business revenue and time in business
Business credit and bank statements
Consistent deposits and cash flow
Personal credit of owners (especially at smaller limits)