Quick Answer
A business line of credit is a revolving credit facility a business can draw on as needed, repay, and reuse - most commonly used for working capital and short-term cash flow.
Key Takeaways
- Lines are revolving, unlike installment loans.
- Interest accrues only on drawn balances.
- Underwriting emphasizes business cash flow and time in business.
When Lines Make Sense
Lines are most useful for managing timing mismatches between expenses and receipts rather than for funding long-term assets.
Frequently Asked Questions
Do unused lines of credit affect business credit?
Unused capacity generally does not harm a business credit profile, though some lenders consider total exposure when underwriting new credit.