Get a business line of credit

What is a business line of credit?

A business line of credit is a type of flexible finance that allows you to borrow funds up to a predetermined limit. Unlike a traditional business loan where you receive a lump sum upfront, a line of credit offers continuous access to funds as needed, with interest charged only on the amount borrowed.

How does a business line of credit work?

You can think of a business line of credit as a safety net that you can dip into whenever cash flow becomes tight, or when unexpected expenses arise. You'll be able to draw funds from your credit line as needed, up to the specified limit. Interest is charged only on the funds you actually use and you’ll make minimum monthly payments, typically consisting of interest plus a portion of the principal balance.

How to get a business line of credit?

Getting a business line of credit involves a similar process to other types of business finance. Typically, you'll need to demonstrate your business' financial stability, historical revenue, and have a good business credit score. This means that to get a business line of credit you’ll likely need to provide the lender with documents such as your latest set of filed accounts and 6 months business bank statements. Some lenders may also assess a business plan or cash flow projections to gauge your ability to repay the credit line.

How is a line of credit different from a business loan?

While both a business line of credit and a business term loan provide access to capital, they differ in terms of their structure and usage:

• Flexible access: A business line of credit offers ongoing access to funds, allowing businesses to borrow as needed, whereas a loan provides a lump sum of cash upfront.

• Interest: Interest on a loan is calculated on the entire loan amount, whereas with a line of credit, you only pay interest on the borrowed amount.

• Repayment: Term loans typically have fixed monthly repayment schedules, while a line of credit offers more flexibility in repayment, depending on how much you use each month.

Are there different types of business lines of credit?

When considering a business line of credit, it's helpful to know there are two main types: revolving and non-revolving lines of credit.

Revolving lines of credit

A revolving line of credit, also known as a revolving credit facility, acts as a flexible cash reserve that you can continuously dip into. Like a line of credit, when you get a revolving credit facility you’ll be approved for a maximum amount which you can borrow and repay as needed.

The key difference to a line of credit is that as you pay back what you borrow, the amount becomes available to use again. This can be handy for managing day-to-day expenses, handling surprises, or taking advantage of opportunities that pop up.

Non-revolving lines of credit

Non-revolving lines of credit provide a set amount of funding for a specific purpose or period. Once you use it and repay it, you can't borrow from it again under the same terms.

This type of finance is more like a traditional loan but with the flexibility to withdraw funds as needed within the set limit. It's typically used for one-time expenses like buying equipment, or funding a project.

How to apply for a business line of credit

Here’s how you can apply for a business line of credit with Capitalise: 

1. Tell us about your business funding needs
Start your application and let us know what your business does, what you want to use the funds for and how much you’re looking to borrow.
Our specialists will help you understand how much you could borrow.  

2. Find the facility that best suits your business
A funding specialist will talk you through the lenders that could provide a facility that suits you.

3. Apply to up to four lenders with one application to save you time and ensure your business doesn't have unnecessary credit checks
With a Capitalise for Business account, you can upload all your documents to one application.
A funding specialist will help put together the finishing touches, and send it to the selected lenders.

4. Get your facility set up in as little as 48 hours
Track responses from lenders on your Capitalise for Business account.
If approved, you could get a line of credit in as little as 48 hours. 

Tip: you can also check your funding eligibility instantly with your Capitalise for Business account.