Business Line of Credit
Revolving working capital that stays ready to draw the moment your business needs cash, so you only pay for what you use.
Checking your limit takes about two minutes and leaves your credit file untouched.
What is a business line of credit?
A business line of credit from FundBetter gives you the freedom to access funds exactly when you need them, instead of taking a single lump sum you pay for whether you use it or not. You draw what you need, up to your limit, and pay interest only on the amount you actually use. As you repay, your available credit replenishes, so the line is ready again the next time cash flow gets tight. It works much like a business credit card, but typically gives you higher limits and lower costs, plus the flexibility to manage payroll, inventory, and unexpected expenses as they arise.
Unlike a term loan, which hands you the full amount upfront and charges interest on all of it, a FundBetter line of credit keeps your capital on standby and costs you nothing until you tap into it.
Benefits of a business line of credit
Only pay for what you use
You're charged interest on the funds you draw, never on your full limit, so an unused line sits ready at no cost.
Draw funds on demand
Once you're approved, request a draw and money can reach your account in as little as 24 hours.
Reusable, revolving credit
Repaid principal returns to your limit, so the same line covers your next gap with no new application to fill out.
Build business credit
On-time payments on every draw you repay strengthen your business credit profile over time.
How does a business line of credit work?
Once you're approved for a credit limit, your line sits ready until the day you need it, with no reason to reapply. When funds are needed, you request a draw and the money can reach your business bank account as soon as the same day, then you repay over a set term with predictable weekly or monthly payments.
As your balance comes down, that credit frees up to draw again, ready for the next opportunity or gap. And beyond any maintenance fee, an open line with no balance on it costs you nothing, so it can sit in reserve without adding to your overhead.
How draws and repayment work on a business line of credit
A draw is a single request to move money from your approved limit into your business bank account, and it's refreshingly simple. You name the amount, confirm it, and the transfer is on its way. Most owners request a draw from an online portal or by calling the FundBetter team. There's no new application for each draw and no fresh underwriting, which is why an open line puts cash in reach far faster than starting a loan from scratch.
The moment a draw funds, your available credit drops by that amount. If your limit is $100,000 and you draw $30,000, you have $70,000 left to request against. That remaining $70,000 stays open and costs you nothing until you take it. Your outstanding balance is the $30,000, and that's the only figure interest is calculated on.
Each draw is repaid on its own schedule. The draw is assigned a term, and you make regular weekly or monthly payments made up of principal and interest. Payments are fixed and scheduled, so you know the full cost of a draw the day you take it rather than watching a balance drift the way a revolving card balance can.
As principal is repaid, it returns to your available credit. Pay $10,000 of principal back on that $30,000 draw and roughly $10,000 becomes available to draw again, without reapplying. Many owners keep two or three draws running at the same time, each on its own payment schedule, so long as the combined outstanding balance stays inside the approved limit.
Business line of credit vs. credit card vs. term loan
All three products put working capital in your hands, but they charge for it in different ways and suit different jobs. SBA loans sit outside this comparison, because they're built for much larger, slower, planned borrowing.
| Business line of credit | Business credit card | Term loan | |
|---|---|---|---|
| Typical limits | $5K to $5M | Usually under $50K, and often far less on a new business | A single approved amount, from small to several hundred thousand |
| How interest is charged | On the drawn balance only, over a set term per draw | On any balance carried past the grace period, usually at a higher rate | On the full amount from day one, whether or not you have spent it |
| Does the credit revolve | Yes, and each draw is repaid on a set schedule, so the balance has a defined end date | Yes, but only a minimum payment is required, so a balance can sit unpaid indefinitely | No. Once repaid the loan closes and you reapply |
| Speed of access | A draw can reach your account in as little as 24 hours, with no reapplication | Instant at the point of sale, but limited to card-accepting vendors | Fast to fund, but every new need means a new application |
| Best used for | Recurring or unpredictable gaps: payroll, inventory, slow-paying invoices | Small everyday purchases and expenses you clear each month | One defined project or purchase with a known cost and payoff date |
What a business line of credit costs
The cost of a line of credit isn't one number, and with FundBetter there are no surprises about it. It's a small, clear set of charges, and the good part is that most of them apply only when you actually use the money, so an idle line stays cheap to keep.
Draw fees on a business line of credit
Many lines charge a flat fee each time you request a draw, commonly a low single-digit percentage of the draw amount, deducted from the funds or added to the balance. It's charged per draw, not per month, so taking one $30,000 draw costs you less in fees than taking six $5,000 draws.
Interest on your drawn credit line balance
Interest applies only to the outstanding principal you have drawn, calculated over the term assigned to that draw, so you never pay for credit you leave untouched. A shorter term means less total interest but a larger regular payment. Ask for the total dollar cost of a draw, not just the rate, so you can compare offers honestly.
Maintenance fees on a business line of credit
Some lenders attach a small monthly or annual maintenance fee to keep a line open. It's modest next to interest, but it's the one charge that can apply in a month when you have drawn nothing, so it's worth pinning down. Confirm whether the line you're offered carries one before you sign.
Why an unused credit line costs nothing
Absent a maintenance fee, an open line with a zero balance generates no charge at all. You pay no interest on credit you haven't taken and no penalty for leaving the line idle. That's why so many restaurants and catering companies keep one standing by: the standby capacity is free, and the alternative is scrambling to apply for money in the week you're already short.
Is a business line of credit the right tool for you?
A line of credit is built for the recurring, unpredictable needs you can't schedule, and it shines exactly there. It's a poor fit for a single large purchase you already know the price of, and we'll tell you so: when a term loan is the smarter call, a FundBetter advisor will point you to it.
When a business line of credit fits
- Your revenue is seasonal or uneven, as it is for most retail businesses, and you need to cover payroll through the slow months
- Customers pay on 30 or 60 day terms while your own bills arrive sooner, which is the normal rhythm for construction businesses
- You want funding standing by for an opportunity or emergency you cannot schedule
- Your funding needs repeat, as they do for ecommerce sellers restocking through the year, and reapplying for a new loan every few months is wasted effort
- You are building a business credit profile and want on-time payments on the record
When a business line of credit is the wrong tool
- You need one large sum for a known purchase, where long-term business loans usually price better
- You are buying equipment, which equipment financing can often cover against the equipment itself on longer terms
- You would use the line to cover an ongoing operating loss rather than a timing gap, which borrowing does not fix
- Your business is under 6 months old or below roughly $15,000 in monthly revenue, so a line is unlikely to be approved yet
- You want a fixed, unchanging monthly payment, since payments shift as you add draws
- You expect long idle stretches and the line carries a maintenance fee
Best ways to use a business line of credit
A line of credit earns its keep in the moments you cannot plan for.
Who qualifies for a business line of credit?
Lines of credit are underwritten on the health of your revenue, not just your credit file. Most approvals look close to this.
Check if you qualifyFrequently Asked Questions
How is a business line of credit different from a term loan?
A term loan is one lump sum, funded once, with interest running on the whole amount from day one. A line of credit is an approved limit you draw against in pieces, and only the drawn portion accrues interest. When the loan is repaid it closes. When a draw is repaid, that principal returns to your available credit for next time.
Do I pay anything if I never draw on my line of credit?
If your balance is zero, there's no interest to pay, because interest is calculated on drawn principal only. The one thing to confirm is whether your line carries a monthly or annual maintenance fee, since that would apply regardless of use. Ask one of our funding advisors before signing so you know exactly what an idle line costs you.
How much can I get with a business line of credit?
Lines through FundBetter generally run from $5,000 to $5 million. Your limit is set by monthly revenue, time in business, and how consistent your deposits look, rather than by your credit score alone. As the business grows and the line is used responsibly, you may qualify for an increase.
Can I have more than one draw open at the same time?
Yes. Each draw is repaid on its own schedule, and you can hold several at once as long as the combined outstanding balance stays within your approved limit. Keep in mind that each active draw adds its own regular payment, so your total weekly or monthly obligation rises with every draw you take.
Is a business line of credit secured or unsecured?
Most lines at these amounts are unsecured, meaning no specific asset is pledged as collateral. A personal guarantee is common, which makes you personally responsible if the business can't repay. Larger limits may require collateral or a general lien on business assets. A FundBetter advisor will tell you which applies before you accept an offer.
How fast can I get money from my line of credit?
Many businesses are approved the same day they apply. After that, a draw can reach your business bank account in as little as 24 hours, because there's no new application or underwriting for each request. This is the main reason owners open a line before they need it.
Other business funding options
Short-Term Business Loans
Prefer a lump sum with a fixed payoff date instead of a revolving limit.
Learn moreInvoice Factoring
If slow-paying customers are the real cause of your cash flow gap.
Learn moreMerchant Cash Advance
When card volume is strong and you need money faster than underwriting allows.
Learn moreFuel growth with a business line of credit
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