Business Line of Credit

The short answer: A business line of credit is a revolving credit facility. You're approved for a maximum amount, draw only what you need, and pay interest only on the outstanding balance. As you repay, the available credit replenishes — like a credit card for your business, but usually at a lower rate.

Qualification

Lenders want to see creditworthiness, time in business, and reliable revenue — and they want evidence you can handle flexible borrowing responsibly. Qualification is more demanding than an MCA but generally easier than an SBA loan.

Speed

Setting up a line takes longer than getting an MCA — often days to weeks — but once it's established, draws are frequently same-day, which is what makes a line so useful for recurring, unpredictable needs.

Repayment structure

Repayment is flexible within the facility's terms: you repay on your own schedule up to the agreed minimums, and the available balance restores as you pay it down. There's no fixed payoff date the way a term loan has.

Cost structure

You pay interest only on what you've drawn, not the full facility. That makes a line one of the cheaper options for short-term, intermittent needs — far cheaper than carrying an MCA for the same period. Some lines carry maintenance fees or draw minimums, so read the terms.

Appropriate use cases

• Bridging the gap between invoicing and payment.
• Buying inventory ahead of a seasonal spike.
• Covering occasional, unpredictable expenses without reapplying each time.

Potential disadvantages

A line can be harder to qualify for than an MCA, and the flexibility can become a trap if you use it to cover persistent losses rather than timing gaps. Compare it directly with a term loan for one-time needs, and with an MCA when speed matters more than cost — the MCA vs. business loan comparison lays out the trade-offs. See the full business funding guide for context.