What is a business line of credit?
A business line of credit (LOC) is revolving financing. Once approved for a credit limit, you can draw funds repeatedly without reapplying each time — similar to a business credit card, but typically with higher limits and lower cost for larger draws.
Why businesses choose a LOC
- Flexibility — borrow only what you need, when you need it
- Cost control — interest accrues on outstanding balance, not the full limit
- Speed — after setup, draws can fund quickly for recurring needs
- Seasonal buffer — ideal for businesses with uneven revenue cycles
Line of credit vs. merchant cash advance
LOCs often require stronger credit and longer time in business than MCAs, but may offer lower total cost for businesses that can qualify. We compare both side-by-side so you can choose based on speed, cost, and repayment structure — not a one-size-fits-all pitch.
Typical requirements
- 1+ years in business on many programs (exceptions for strong revenue)
- 600+ personal/business credit on traditional LOC products
- Consistent monthly revenue and clean bank statements
- No active tax liens or recent bankruptcies on most files
If a LOC is not the right fit
Strong revenue but lower credit? Explore bad credit business funding or working capital programs with revenue-based underwriting.