Business Line of Credit

What Is a Business Line of Credit?

A business line of credit is revolving financing that may provide access to funds up to an approved credit limit. Unlike a lump-sum term loan, a line may allow draws as needed, subject to available credit and lender terms.

Common Uses

• Inventory purchases
• Payroll and seasonal expenses
• Materials and supplies
• Unexpected repairs
• Vendor payments
• Short-term cash-flow gaps
• Growth opportunities

How It Works

1. Request financing.
2. Explore potential options.
3. If approved, receive a credit limit.
4. Access funds as needed, subject to the product terms.
5. With revolving products, repaid amounts may become available again.

Line of Credit vs. Term Loan

A line of credit is generally suited to ongoing or variable needs, while a term loan may be better suited to a defined investment or project. The right structure depends on your business and the terms offered.

Things to Consider

Review financing costs, draw or annual fees, repayment frequency, credit limit, renewal requirements, guarantees and collateral requirements.

Frequently Asked Questions

Do I have to use the entire credit line?

Generally, a line is designed to allow draws against available credit. Exact rules depend on the provider.

Can I reuse credit after repayment?

With a revolving line, repaid amounts may become available again subject to the lender's terms.

Is it the same as a business credit card?

No. Both may provide revolving credit, but access methods, rates, fees, rewards and payment requirements can differ.

Important: Clear Water Funding Source is not a bank or direct lender. We connect businesses with independent third-party lenders and funding providers. Financing is subject to provider approval, eligibility requirements, rates, fees and applicable terms. Submission of a funding request does not guarantee approval or an offer of financing.