Question 1

What is a business line of credit?

Accepted Answer

A business line of credit provides revolving access to capital up to a set limit. You can draw funds as needed, repay, and draw again. You only pay interest on the amount borrowed.

Question 2

How is a line of credit different from a loan?

Accepted Answer

With a loan, you receive a lump sum and make fixed payments. With a line of credit, you draw what you need when you need it, and only pay interest on outstanding balances.

Question 3

What is a draw on a line of credit?

Accepted Answer

A draw is when you access funds from your line of credit. You can typically draw via online transfer, check, or linked card. Some lines have minimum draw amounts.

Question 4

Do business lines of credit have fees?

Accepted Answer

Common fees include annual fees, draw fees, and inactivity fees. Not all lenders charge all fees. Review the full fee structure before accepting a line of credit.

Question 5

What credit score do I need?

Accepted Answer

Most business lines of credit require 600+ credit scores. Better rates and higher limits are available for scores above 680. Some lenders focus more on revenue than credit.

Question 6

Is a business line of credit secured or unsecured?

Accepted Answer

Both options exist. Unsecured lines don't require specific collateral but may have lower limits. Secured lines (backed by assets, receivables, or inventory) may offer higher limits and better rates.

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