WHAT IS A BUSSINESS LINE OF CREDIT?

While at first glance, a business line of credit might sound similar to a small business loan. However, it is more similar to a small business credit card. The business LOC gives you a revolving credit through which you can access a fixed amount of capital which you can use to perform your desired business operations. Unlike a small business loan, there is no lump sum of disbursement, which you need to return via instalments.

The financing company will give you a fixed amount of credit, and you can withdraw money from that every time you need it. This means that you don’t have to make repayments for the entire credit amount that has been given to you. Rather than that, you have to pay back the money that you have withdrawn from the allowed credit amount. Once you pay back the balance amount, the credit limit is open again for you to withdraw.