Business finance

Business Line of Credit

A business line of credit or overdraft facility is a very flexible form of lending where you have cash available from a lender for you to draw down on as and when you need it, at previously agreed upon terms.

Loan size

$15K To $2M

loan term

6 months to 3 years

Interest rate

5% to 15%

Approval speed

Fast

Business line of credit

Key features of a business line of credit

Maintaining a business line of credit allows your business to be nimble in the event of a sudden business opportunity or large order while simultaneously reducing business risk should any unforeseen or emergency expenditures occur.

Compare a business line of credit

Advantages and disadvantages

Businesses that operate in industries that experience highly seasonal revenues find a line of credit especially useful to balance cash flows.

Advantages

What are the advantages of a business line of credit

Disadvantages

What are the disadvantages of a business line of credit

Common uses and good to know

Everything else about a business line of credit

Common uses

The flexible nature of this type of loan makes it ideal to provide capital for unexpected opportunities or to cover emergency expenditure or short term cashflow shortfalls.

You only pay interest on the amount you draw down.

A line of credit will allow you to repay your debt at any time and then draw down again in the future.

A credit card is essentially an expensive form of a line of credit.

Good to know

There may be fees applied to set up or maintain a line of credit even if it is never used.

Interest rate jumps dramatically if you draw down in excess of the agreed upon amount.

The line of credit may also introduce some funding risk as the bank or lender can cancel the facility at their discretion.

Alternative Commercial Lending options

Other Business Finance Products​

Secured Business Loan

A secured business loan is a loan made by a bank or finance company where the lender requires the borrower to pledge assets as collateral against the loan.

Unsecured business loan

Unsecured business loans are loans made without requiring business collateral such as property or inventory.

Trade finance

Trade finance is any form of finance that is issued to support international trade, including letters of credit, debtor finance, & export credit.

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Recent Articles

Business line of credit FAQ

Frequently asked questions

Traditional bank lenders prefer to see borrowers who have at least two years of operating history to qualify for a business line of credit.

A larger line of credit will require collateral such as a property or other significant asset.

A start up would in general only be eligible for a business line of credit if the founder posts collateral and/or a personal guarantee.

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