A business line of credit is a revolving source of funds. You are approved for a limit, draw only what you need, and generally pay interest on the amount you use. As you repay, the available credit is replenished, depending on the terms.
When a line of credit makes sense
- Smoothing out uneven cash flow or seasonal slow periods
- Covering payroll or supplier payments while waiting on customer invoices
- Buying inventory ahead of a busy season
- Having a cushion for unexpected costs
Line of credit vs. term loan
A term loan delivers a lump sum that you repay on a fixed schedule, which suits a one-time purchase or expansion. A line of credit suits ongoing or unpredictable needs, because you borrow only when you need to. Compare the full cost of each, including fees.
What to expect when you apply
Lenders usually review time in business, revenue, bank activity and credit. Applying through LEY Funding takes about three minutes, and a specialist follows up to explain the options that fit. You are never obligated to accept an offer.
Frequently asked questions
Do I pay interest on the whole limit?
Typically you pay interest only on the amount you draw, though fees and terms vary, so review them carefully.
Can I use it for any business purpose?
Usually, within the lender’s terms. Your specialist can confirm what is allowed.
Related: working capital loans, SBA loans and our payment calculator.
Funding products, amounts, rates, fees and terms vary and are subject to credit review and approval. Not all applicants will qualify. This page is general information, not a commitment to lend or financial advice.