What is a business line of credit?

A business line of credit is a flexible, revolving financing facility that lets you borrow up to a set limit, repay, and borrow again as needed. Unlike a term loan, you only pay interest on the amount you have drawn. Lines of credit are ideal for managing cash flow gaps, covering seasonal expenses, or funding short-term working capital needs. Revolving credit lines reset as you repay; non-revolving lines reduce permanently as funds are drawn. Secured lines (backed by collateral) offer higher limits and lower rates. Unsecured lines require stronger credit and revenue. Annual fees, draw fees, and unused line fees may apply depending on the lender.