Business line of credit
A line of credit ready when your cycle says go
A business line of credit gives you a revolving pool of capital you draw against when the operating cycle calls for it. You pay interest only on the amount you draw, and your available credit replenishes as you repay. It is the right tool when your need for cash is recurring or hard to time exactly.
- Draw only what you need, when you need it
- Interest accrues on the drawn balance, not the full line
- Access replenishes as you repay
- Sized to your revenue and operating profile
Illustrative example
CS · 2026Line of credit
$250,000
Revolving · indicative
Example only. Not an offer of financing, a quote, or a credit decision.
What is a business line of credit?
A business line of credit is a revolving credit facility. Instead of a single lump sum, you get continuous access to a set credit limit and draw from it as needed. You pay interest only on what you have drawn, and as you repay, that capacity becomes available again. It suits businesses with variable or seasonal cash needs: covering payroll between receivables, buying inventory ahead of a busy season, or bridging a timing gap without committing to a fixed term loan.
What it gives you
Pay for what you use
Carrying cost tracks the drawn balance, not the full limit.
Revolving access
Repay a draw and that capacity is available to use again.
Ready before you need it
A line in place is a reserve you can act on the day an opportunity or gap appears.
Fast draws
Once the line is set up, pulling funds is quick and does not require a new application each time.
Frequently asked
Questions, answered plainly.
How is a line of credit different from a term loan?+
A term loan hands you one lump sum on a fixed schedule, so it fits a cost you know in advance. A line of credit is a reusable limit you draw against and repay again and again, so it fits recurring or hard-to-time needs. The simplest way to hold it in your head: a term loan is like a mortgage, a line is like a credit card for the business. Most established operators use both, for different jobs.
Example
You open a $150,000 line. In March you draw $40,000 to stock up for spring, repay it by June as sales land, then draw again in the fall. You pay interest only while the $40,000 is out, and the full $150,000 is available each time you repay.
How much can I get?+
Limits track your revenue, time in business, cash-flow consistency, and credit. A rough industry rule of thumb is that lenders size a line somewhere around 10 to 20 percent of annual revenue, with strong financials pushing higher. The point of getting matched is to replace that rule of thumb with a real, indicative range for your business.
Example
A distributor doing $3M a year with clean statements and three years of history might see a line in the $300,000 to $600,000 range. A newer shop at $600k in revenue might see $30,000 to $75,000.
What does it actually cost?+
You pay interest on the drawn balance, occasionally with a small draw or annual fee, and nothing on the part you leave untouched. That is the quiet advantage of a line: kept in reserve, it costs almost nothing until the day you need it. Every rate and fee is disclosed in writing before you commit.
Example
On a $100,000 line, if you draw $20,000 for two months at an 18% annual rate, the interest is about $600 total ($20,000 × 18% × 2/12). The other $80,000 sat available at no cost.
Do I pay interest on the whole limit?+
No. Interest applies only to the amount you have actually drawn. The undrawn portion sits available at no interest cost, which is exactly why a line works well as standing insurance against a cash-flow gap you cannot perfectly predict.
Is there a draw period, and does the line renew?+
Most lines have a defined draw window followed by a repayment phase, and many renew or are reviewed annually as long as you use them responsibly. Treating the line well early (drawing, repaying on time, not maxing it) is what earns a higher limit and better terms at renewal.
Can I use it for payroll?+
Yes, and smoothing payroll across uneven receivables is one of the most sensible uses. The discipline that matters: use the line for timing gaps you will close soon, not to cover a structural shortfall, since a line is short-term capital by design.
Example
A staffing firm covers a $30,000 payroll run the week before a client's net-30 invoice clears, then repays the draw the day the payment lands. The line bridged the timing, not a loss.
Business line of credit: flexible working capital, explained
A business line of credit is the right structure for businesses that run on cycles rather than a single big purchase. Capital Selector sizes the line against the rhythm of your revenue and current credit conditions, so the pool is there the day your operating cycle calls for it, and you carry cost only when you draw.
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