Also known as: business LOC, revolving line of credit, BLOC
A business line of credit is a revolving form of financing that lets a business draw funds up to a set limit, repay, and draw again — paying interest only on the amount actually used. Unlike a lump-sum loan, it is flexible, on-demand capital meant for recurring or unpredictable short-term needs like payroll gaps, inventory, or bridging slow-paying invoices. As the balance is repaid, the available credit replenishes.
A term loan gives you a single lump sum that you repay on a fixed schedule with interest on the full amount from day one — it suits a one-time, defined purchase. A line of credit gives you a reusable limit you tap only when needed, paying interest on just the drawn balance, which suits ongoing or unpredictable needs. Most businesses use both: a term loan for a known capital purchase, and a line of credit as a flexible cushion for the timing gaps that come up throughout the year.
Lines of credit shine for working-capital timing: covering payroll before customers pay, buying inventory ahead of a busy season, or absorbing a slow month without scrambling. Lenders size the limit to revenue, deposit history, and credit, and many lines are revolving and renewable as long as the business stays healthy. Because the funds are reusable, a line is often the most efficient first financing tool a growing business sets up.
A line of credit is the most flexible everyday financing tool a business can hold, which makes it one of the most commonly sought products — and for brokers, a frequent entry point that opens the door to term loans, factoring, and other financing as the relationship grows.
A loan is a lump sum repaid on a fixed schedule with interest on the full amount; a line of credit is a reusable limit you draw from as needed, paying interest only on what you use. The line is flexible and revolving; the loan is one-time and fixed.
For recurring or unpredictable short-term needs — bridging payroll before customers pay, buying inventory ahead of a busy season, or covering a slow month. For a single, defined purchase, a term loan usually fits better.
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