Revolving business credit
A Business Line of Credit for Flexible, Ongoing Needs
A business line of credit gives you access to funds up to a set limit. Draw what you need when you need it and repay it. In a revolving line, repaid principal becomes available again, which suits seasonal swings, recurring purchases and expenses that are hard to time.
Start with a short application. An advisor reviews your details and explains which lines may be available, including limits, rates and fees.
- What it is
- A credit limit you draw from as needs arise
- Interest
- Generally charged on the outstanding balance, not the full limit
- Possible fees
- Origination, draw, maintenance or unused-line fees, depending on the provider
- Common forms
- Revolving or non-revolving, secured or unsecured
Limits, rates and fees are set by the provider. Many lines are reviewed periodically and may be renewed, reduced or closed.
Borrow, repay and borrow again
A provider approves a credit limit. You draw funds when you need them, usually by transfer to your business bank account, and you pay interest on the amount drawn.
With a revolving line, each repayment of principal frees up that amount to use again, similar to a credit card. With a non-revolving line, draws reduce what is available, and repaid amounts do not become available again.
Many business lines carry a variable rate tied to an index such as the prime rate, and many are reviewed or renewed on a set schedule. Some lines have a draw period followed by a repayment period, and some set a separate repayment schedule for each draw.
Get a limit
The provider sets a maximum based on its review of your revenue, credit and business history.
Draw when needed
Move funds into your account for a purchase, payroll or a short gap.
Repay on schedule
Make the required payments on what you drew, plus interest and any fees.
Reuse the line
In a revolving line, repaid principal can be drawn again while the line stays open and in good standing.
How draws and repayments change what you can use
Adjust the limit, how much you draw and how much principal you repay. The bar shows what you could draw again in a revolving line.
Available to draw now
$75,000
- Outstanding balance
- $25,000
- Credit limit
- $100,000
- Restored by repayments
- $15,000
Educational example. Not a quote, offer or approval. It ignores interest and fees and assumes a revolving line in good standing. Actual limits, terms and fees are set by the provider.
When a line of credit may make sense
It may fit when
- Your expenses or revenue rise and fall through the year.
- You want funds available for needs you cannot fully predict.
- You make recurring purchases, such as inventory, that you repay from sales.
- You would rather pay interest only on what you use.
Another option may fit better when
- You need one amount for a defined project. Explore term loans
- You are buying equipment that will serve the business for years. Explore equipment financing
- Business customers owe you on unpaid invoices. Explore invoice factoring
- Your business is new and you want to strengthen its credit profile first. Read the guide
Ways businesses use a line of credit
Seasonal inventory
Stock up before peak months and repay as the season sells through.
Short cash flow gaps
Cover expenses while you wait on a large customer payment.
Payroll timing
Keep payroll on schedule when receipts arrive unevenly.
Time-sensitive purchases
Act on a bulk discount or an opportunity that will not wait.
Unexpected costs
Handle a repair or an urgent expense without disrupting operations.
A standby reserve
Keep access to funds you may not need right away.
What providers typically review
Lines of credit are often underwritten more like traditional loans than revenue-based advances. Requirements vary by provider.
- Revenue and cash flow
- Providers look for consistent revenue that could support repayment if much of the limit were drawn.
- Time in business
- Many lines look for a longer operating history than short-term working capital. Requirements vary by provider.
- Credit history
- Personal and business credit carry significant weight, particularly for unsecured lines.
- Financial statements
- Larger lines often require tax returns, profit and loss statements and balance sheets.
- Collateral
- Secured lines may be backed by receivables, inventory or other business assets. Unsecured lines typically require stronger credit and revenue.
- Current obligations
- Existing debt payments affect the limit a provider is willing to set.
Find out what kind of line may fit your business.
Tell us about your revenue and how you expect to use the line. An advisor will explain options that may be available, including the limit, rate structure and fees.
What a line of credit can cost
A line of credit can be economical when you draw only what you need, but fees and variable rates change the math.
Terms to know
Variable rate
Many lines charge interest tied to an index such as the prime rate, so the rate can change during the life of the line.
Origination fee
A one-time fee to open the line, often a percentage of the limit and sometimes deducted from the first draw.
Draw fee
A fee charged each time you draw funds, usually a percentage of the draw. Not every line has one.
Maintenance or annual fee
A recurring fee to keep the line open, whether or not you use it.
Unused-line fee
A charge on the portion of the limit you do not use, found in some lines.
Review and renewal
Many lines are reviewed periodically. The provider may renew, reduce or close the line based on your finances.
Tradeoffs to weigh
- Variable rates can raise payments when market rates rise.
- A provider may reduce or freeze a line if your finances change, so it should not be your only reserve.
- Carrying a full balance for long-term needs can cost more than a term loan.
- Many lines require a personal guarantee, and secured lines place a lien on business assets.
Hypothetical example
Paying interest only on what you use
A business has a $100,000 revolving line at an example rate of 12% per year and draws $30,000 for one month.
- Credit limit
- $100,000
- Amount drawn
- $30,000
- Example annual rate
- 12%
- Interest for one month on $30,000
- About $300
- Still available to draw that month
- $70,000
Hypothetical illustration of simple interest only, without fees. Not an offer or a quote. Actual rates, fees and repayment terms vary by provider.
What happens after you apply
Not sure whether a line or a lump sum fits better? Start the application and an advisor will review it with you, or call to talk it through first.
Questions first? Call 619-387-5891Complete the application
Share basic details about your business, the limit you are looking for and how you plan to use it.
Send your bank statements
Provide your last four business bank statements. Larger lines may also need tax returns and financial statements.
Review options with an advisor
Correia Financial identifies providers whose lines may fit and explains any offers, including the rate type, fees and review terms.
Provider review
The provider completes its own underwriting. Approval, the limit and final terms are the provider’s decision.
Open the line
If you accept and sign, the line is opened and you can draw according to the agreement.
A line of credit compared with related options
| Feature | Business line of credit | Term loan | Business credit card |
|---|---|---|---|
| How funds are accessed | Draw as needed, up to a limit | One lump sum at closing | Card purchases up to a limit |
| Interest | On the outstanding balance | On the full loan amount from the start | On balances carried past the due date |
| Repayment | Payments on what you draw; repaid principal can be reused in a revolving line | Scheduled payments over a set term | A minimum payment on the balance each month |
| Best suited for | Recurring or uneven needs | A defined project or purchase | Smaller everyday purchases |
| Watch for | Variable rates and draw, maintenance or unused-line fees | Prepayment terms and total interest | High rates on carried balances |
General comparison. Features vary by provider and agreement.
Line of credit questions
Related financing
How does a business line of credit work?
A provider sets a credit limit. You draw funds as needed and repay them with interest on what you drew. In a revolving line, repaid principal becomes available again while the line remains open.
Does an unused line of credit cost anything?
It can. Interest generally applies only to drawn amounts, but some providers charge origination, annual, maintenance, draw or unused-line fees. Review the fee schedule before you accept.
What is the difference between revolving and non-revolving lines?
A revolving line lets you reuse repaid principal up to the limit. A non-revolving line lets you draw up to the limit, but repaid amounts do not become available again.
Is a line of credit secured or unsecured?
Both exist. Secured lines are backed by business assets such as receivables or inventory. Unsecured lines rely more on credit and revenue, and many still require a personal guarantee and a general lien on business assets.
Can the provider change my limit?
Many agreements allow the provider to review the line periodically and to reduce, freeze or not renew it if the business’s finances change. Check the review and renewal terms before you sign.
How is a line of credit different from a credit card?
Both can revolve, but a business line usually moves cash into your bank account and may have a larger limit and a different rate structure. Credit cards are built for purchases and often carry higher rates on balances you carry.
Learn before you apply
Guides that answer the questions owners ask about this kind of financing.
Costs & ComparisonsBusiness line of credit vs. term loan: which fits?
Revolving access or one lump sum? Compare repayment, costs, qualification and six common scenarios to see which structure fits your need.
Industry GuidesWholesale distributor financing: inventory and receivables
Measure your cash conversion cycle, then see when a credit line, invoice factoring or working capital fits the gap between supplier and customer.
Industry GuidesMarketing agency financing between client payments
How agencies bridge late retainers, project invoices and media pass-through, and how client concentration shapes what providers may offer.
More guides on this topic
Keep Funds Ready for Whatever Comes Next.
Whether you’re stocking up for a busy season, smoothing out uneven receipts or keeping a reserve for the unexpected, a line of credit may give you room to act. Share your business details so Correia Financial can review potentially available options and explain the limits, rates and fees.
Complete the application and provide your last four business bank statements for an initial review. Additional documents may be required.
Correia Solutions LLC dba Correia Financial is a business financing brokerage, not a lender. Availability and terms depend on each provider's requirements and underwriting. Applying does not guarantee approval or funding.