Funding Options
Flexible Business Line
of Credit
for Small Businesses
Discover the ins and outs of business lines of credit—from how revenue-based financing and revolving credit lines work to their top benefits and critical considerations. Learn how this flexible funding solution can deliver quick capital access and working capital when you need it most, and find out how to choose the right provider—from Merchant Cash Advance Direct Lenders to SBA Business Loan specialists—to secure the best line of credit for your business.
What Is a Business Line of Credit?
Our business line of credit is a flexible financing solution that provides a revolving pool of funds you can draw on only when needed—so you pay interest solely on the amount you use. This on-demand capital helps you smooth out cash flow, cover unexpected expenses, and seize growth opportunities with confidence.
How Does a Business Line of Credit Work?
A business line of credit delivers a preset pool of working capital you can tap into on demand—much like a small business cash advance or revenue advance financing option. You borrow and repay within your credit limit, paying interest only on the funds you use. This flexible alternative funding solution helps you manage cash flow, cover unexpected expenses, and maintain quick capital access without the constraints of an SBA Business Loan.
How to Use a Business Line of Credit
Lines of credit—from Merchant Cash Advance Direct Lenders to traditional SBA Business Loan providers—offer a flexible source of working capital and quick capital access to manage cash flow, cover operational expenses, or bridge revenue gaps during slower periods. As an alternative funding solution and revenue-based financing option, they also empower you to fund short-term projects or seize unexpected growth opportunities without the long-term commitment of an SBA Business Loan.
Cover Seasonal Expenses
Companies experiencing seasonal revenue swings can rely on a business line of credit—an alternative funding solution and working capital source—to smooth cash flow during slower months. Whether you’re tapping into quick capital access from Merchant Cash Advance Direct Lenders or leveraging revenue-based financing, this revolving credit line ensures you can cover payroll, operational expenses, and short-term needs without the rigidity of an SBA Business Loan.
Purchase Inventory in Bulk
Businesses can leverage a revolving line of credit—whether from Merchant Cash Advance Direct Lenders or via revenue-based financing—to purchase inventory in bulk at discounted rates. This alternative funding solution and capital funding service lets you secure the inventory you need without draining your cash reserves, boosting profit margins while maintaining working capital.
Fund Marketing Campaigns
Businesses can leverage a revolving line of credit—whether from Merchant Cash Advance Direct Lenders or via revenue-based financing—to purchase inventory in bulk at discounted rates. This alternative funding solution and capital funding service lets you secure the inventory you need without draining your cash reserves, boosting profit margins while maintaining working capital.
Revolving vs Non-Revolving Lines of Credit
Lower Interest Rates and Favorable Terms
SBA Business Loan rates are typically lower and feature longer repayment terms than conventional financing, resulting in more manageable monthly payments and less financial strain.
Flexible Use of Funds
An SBA Business Loan can address diverse business needs—whether you’re purchasing inventory, acquiring equipment, covering operational expenses, or financing expansion. This flexible financing solution lets you allocate capital where it’s needed most.
Why Apply for a Business Line of Credit?
Pros & Cons of
Lines of Credit
Pros
- Revolving Credit
- Builds Credit History
- No Collateral Required (in Some Cases)
Cons
- Variable Interest Rates
- Annual Fees and Maintenance Costs
- Frequent Reassessment by Lenders
Is a Business Line of Credit Right For You?
Lines of credit offer flexible funding and quick capital access—ideal for smoothing cash flow and tackling urgent expenses. As an alternative funding solution alongside Merchant Cash Advance and revenue-based financing, they provide on-demand working capital. However, it’s crucial to compare all options—from SBA Business Loans to small business cash advances—to choose the financing that best aligns with your growth goals and operational needs.
Additional Loan and Financing Options to Consider
SBA Loan
An SBA Business Loan is a financing option backed by the U.S. Small Business Administration to support small businesses. The SBA’s partial guarantee lowers lender risk, enabling you to secure funding with more favorable terms—such as reduced interest rates and longer repayment periods.
Revenue Advance: A Flexible Lending Alternative
A revenue advance provides upfront capital based on your projected future sales, with repayment structured as a percentage of your daily earnings. As an alternative funding solution, it often outpaces an SBA Business Loan in approval speed and flexibility. Unlike a traditional small business loan with fixed monthly payments, this revenue-based financing adjusts repayments to match your cash flow—giving you quick capital access without the burden of rigid repayment schedules.
Minimum Eligibility Requirements
Time in Business
Minimum 1 Year
Business Annual Growth Revenue
No minimum
Business Checking Account
Yes
US Citizen/Based Company
Yes
FICO Score
500+
Other Funding
None
Bankruptcies
None preferred
Business Line of Credit FAQ
Several factors influence business line of credit rates, including the company’s creditworthiness, the amount of collateral (for secured lines), and current market interest rates. Businesses with strong credit, consistent cash flow, and substantial assets often secure more favorable terms. Unsecured lines usually have higher rates because of the greater risk to lenders. Additionally, rates can vary depending on the lender’s policies, so it’s wise to shop around and compare offers before committing to a line of credit.
A business line of credit is intended for business-related expenses, so using it for personal purposes is typically not allowed. Doing so may breach the terms of your credit agreement, potentially resulting in financial or legal consequences, especially if the lender finds out. Keeping personal and business finances separate not only ensures adherence to the agreement but also simplifies bookkeeping and safeguards your credit.
It can impact your credit score, but the effect depends on the type of credit score being considered. For a business credit score, making timely payments on a business line of credit can improve it, while late payments can lower it. If a personal guarantee is required, it may also influence your personal credit. Always verify whether the lender reports to business, personal, or both credit bureaus to understand where the impact might occur.
The interest paid on a business line of credit is generally tax-deductible, but only when it’s used for valid business expenses. This includes costs related to operations, equipment, or other business-related needs. The IRS has specific rules, so it’s wise to consult a tax advisor to ensure your deductions comply with regulations and to maximize potential tax benefits.
Business lines of credit can differ significantly depending on the lender, the business’s creditworthiness, and its financial standing. Some lines may be as low as $10,000, while others can exceed $1 million for businesses with substantial assets and strong credit. Lenders evaluate your financial information to decide the amount they’re willing to offer, so providing thorough documentation can help you secure a larger credit line.
A secured business line of credit requires collateral—such as inventory, equipment, or real estate—which serves as a safety net for the lender. Due to this added protection, businesses can typically secure higher credit limits and lower interest rates compared to unsecured lines. This option is advantageous for businesses with significant assets and can reduce financing costs over time.
An unsecured business line of credit does not require collateral, so there’s no need to pledge assets for approval. Instead, lenders depend on the business’s creditworthiness and cash flow to assess risk. While this option is often more attainable for companies without assets to secure a line, unsecured lines of credit usually have lower limits and higher interest rates to offset the increased risk.
For new businesses, securing a line of credit can be difficult, as lenders typically favor a proven financial track record. Establishing business credit over time, maintaining a solid personal credit score, and preparing detailed financial documents can improve the chances of approval. Startups might also explore secured options or seek out community banks and lenders that specialize in working with newer businesses, as they may offer more flexible requirements.
