Revolving capacity you can draw — and leave unused when deposits are fine.

What it is

A business line of credit is a committed or discretionary limit. Interest or fees typically accrue on the drawn amount, not on the unused room — though unused-line fees exist on some facilities and should be read in the documents.

Unlike a term loan, the balance is not supposed to be a one-way trip to zero on a fixed calendar. The point is to absorb timing: a slow week, a large materials order, a payroll that lands before the customer pays.

Lines can be unsecured, secured by deposits or receivables, or supported by a personal guarantee. The legal papers — not the product name — decide which.

Who it fits

Operators whose revenue is real but lumpy: uneven deposit months, wholesale, light manufacturing, contractors paid on a draw schedule. It is a poor match for a brand-new entity with no deposit pattern, and a worse match for a permanent hole in the P&L.

If you already have an advance that takes a daily or weekly debit, stacking a line on top can consume the same inflow twice. Disclose existing facilities on the application.