Business Line of Credit
A business line of credit is revolving capital you can draw from, repay, and draw from again, up to a set limit, paying interest only on what you actually use. It is built for recurring or unpredictable cash needs rather than a single one-time purchase. Custom Capital Advisors is a financing brokerage, not a lender. We help you decide whether a line of credit is the right structure, connect you with the right lender, and make sure the terms fit how your business actually runs.
What is a business line of credit?
Unlike a term loan, which gives you a lump sum you repay on a fixed schedule, a line of credit is a flexible reserve you tap as needed. You are approved for a limit, draw against it when something comes up, and repay what you borrowed. As you repay, that capacity becomes available again. You carry a balance only when you are actually using the funds, and interest applies only to the amount drawn.
How does a business line of credit work?
Once your line is in place, you draw funds when you need them, up to your limit. You repay on the lender's terms, and the repaid amount frees up again for future use. Lines can be secured (backed by collateral such as receivables or inventory) or unsecured, which affects the limit and pricing. The value is readiness: the line sits available so you are not scrambling for capital the moment a gap or an opportunity appears.
What does a business line of credit cost?
You typically pay interest only on the balance you draw, not on the full limit, and some lines carry a draw fee or a maintenance fee. Rates depend on the lender, whether the line is secured, and your business's financials. Because you pay for what you use, a line can be an efficient way to manage timing without carrying the cost of a full loan you do not yet need. We describe rates and fees as ranges and typical cases, never as a promise, because the real numbers come from the lender once your file is reviewed.
Who is a business line of credit right for?
A line of credit fits businesses with recurring or seasonal cash-flow swings, ongoing working-capital needs, or a desire to keep capital on standby for opportunities and surprises. If your needs are unpredictable and repeat over time, the draw-and-repay structure usually serves you better than taking a lump sum you may not need all at once.
When a line of credit is the wrong fit
If your need is a single, defined, one-time purchase, a term loan often makes more sense and can cost less over the life of the financing. If you would use the line to carry debt you are already struggling to repay, that is a warning sign, not a solution, and we will talk that through honestly rather than set you up to fall behind. A line of credit is a tool for managing healthy cash flow, not for papering over a deeper problem.
Line of credit vs other financing
A line of credit is often the right call when needs are recurring or unpredictable and you want capital on standby. A business term loan is usually better for a single large purchase you repay over time. A revenue advance is often faster and repays from your sales, which can fit when speed matters most and the need is short-term. We help you weigh these against how your business actually operates, not against whichever product pays us most. If you are choosing between a line and factoring specifically, see our guide to invoice factoring vs a line of credit.
Common Questions
Ready to talk it through?
If you are weighing a line of credit, let's make sure the structure and terms fit how your business runs before you commit. No pressure, no promises about rates or approval, just a straight read on your options. Start a conversation or learn how our capital consulting works.
Last updated: July 2026