Business Line of Credit
Business Line of Credit
Revolving access to capital — draw what you need, repay, and draw again. Built for uneven revenue and recurring operating gaps, not for one-time purchases.
The short answer
A business line of credit is revolving access to capital up to an approved limit. You draw what you need, when you need it, and under most structures you pay costs only on the drawn balance — not the full limit. As you repay, the available balance is restored, so you can draw again. It is designed for recurring or uneven operating gaps, and it differs from a term loan (a lump sum), from general working capital (which can be a loan or a receivables purchase), and from a merchant cash advance (which is not a loan).
Key takeaways
What to know first
A line of credit is revolving — draw, repay, and draw again, up to an approved limit.
Under most structures, you pay costs only on what you draw, not the full limit.
It suits uneven or recurring operating gaps better than a lump-sum loan.
It is not a term loan (no lump sum), not an MCA (not a receivables purchase), and not equipment financing (not an asset purchase).
No credit limit, rate, or draw period is guaranteed — availability depends on your profile and the provider.
What it is
Business Line of Credit, explained
A business line of credit is revolving access to capital up to an approved limit. Instead of receiving a lump sum, you draw what you need when you need it. Under most structures, you pay costs only on the drawn balance, not the full limit. As you repay, the available balance is restored, so you can draw again — the same mechanic as a credit card, but structured for a business.
Because it is revolving, a line of credit suits businesses with uneven or recurring operating gaps — seasonal revenue, lumpy customer payments, or unexpected costs that come and go. It is not designed for a one-time asset purchase (equipment financing fits that) or a large, long-horizon investment (a term loan fits that).
How it works
The process, end to end
- 01
Identify whether your need is recurring or uneven — a line of credit is built for gaps that come and go.
- 02
Review your monthly deposits, revenue consistency and existing financing.
- 03
Compare a line of credit against a term loan and a receivables purchase on cost, repayment and flexibility.
- 04
Build your capital profile so Nifty can route the request to the right structure.
Right fit
When it fits — and when it doesn't
When it fits
- Seasonal cash needs — inventory before a peak season, payroll during a slow one
- Unexpected expenses that come and go, not a one-time purchase
- Bridging lumpy customer payments without taking a lump sum
- Recurring operating gaps where you want to pay only on what you use
When it may not
- Buying equipment or a vehicle — equipment financing is the right structure for an asset.
- A large, one-time investment like an acquisition — a term loan is usually a better fit.
- If your need is a single, defined gap rather than a recurring cycle — a short-term loan may be simpler.
Structures
How this financing can be structured
Revolving Line of Credit
Line of creditDraw up to an approved limit, repay, and draw again. Under most structures, you pay costs on the drawn balance.
Short-Term Line of Credit
Line of creditA line with a shorter repayment horizon, often used for near-term operating gaps.
Compare
Line of credit vs. alternatives
| Dimension | Line of Credit | Term Loan | Working Capital (MCA) |
|---|---|---|---|
| Structure | Revolving access up to a limit | A lump sum repaid on a schedule | A purchase of future receivables — not a loan |
| What you pay on | The drawn balance | The full lump sum | The purchased receivables (a factor rate) |
| Reusability | Yes — repay and draw again | No — one-time disbursement | Generally no — a single transaction |
| Best suited for | Recurring or uneven gaps | A defined, larger investment | Short-term need against future receivables |
Eligibility
What may affect availability
- Time in business and revenue history
- Consistency of monthly deposits
- Existing financing obligations
- Owner credit profile
Prepare
Documents you may need
- Recent business bank statements (typically several months)
- Business tax returns
- Government-issued identification
- Statements for existing financing, if any
Cost & structure
Understanding the cost
A line of credit is not a lump sum, so its cost is not an APR on a fixed amount. Under most structures, you pay on the drawn balance — which means the cost scales with how much you actually use, not the limit you're approved for.
When comparing a line of credit against a term loan or a merchant cash advance, compare the total cost for the amount you actually expect to draw, not the headline limit.
In practice
In practice
A seasonal retailer draws on a line of credit to buy inventory before the holidays, then repays as sales arrive — paying only on what it drew.
A service business with lumpy client payments uses a line of credit to cover payroll during a slow month, repaying when a large invoice settles, then drawing again the next time.
Tool
Run the numbers first
Term Loan Payment Calculator
Compare the cost of a term loan against a line of credit by modeling the payment on a lump sum — so you can see whether revolving access or a fixed loan fits your need better.
How Nifty works
From profile to funded
- 01
Build your capital profile — tell us about your revenue cycle and the gaps you're bridging.
- 02
Share recent business bank statements.
- 03
Compare a line of credit against a term loan and a receivables purchase on cost and flexibility.
- 04
Complete the provider's process for the structure you choose.
Understand before you choose
Questions.
Next step
Build Your Capital Profile
Tell us about your operation. We'll route your request to the structure that fits — no obligation to accept any option.