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

A term loan is a one-time lump sum with fixed payments. A line of credit lets you draw funds repeatedly up to a limit and only pay interest on what you use.

Can I use it for any business purpose?

Yes - payroll, inventory, marketing, equipment repair, taking on a new contract. There are no use-of-funds restrictions.

Is there a fee if I don't use it?

Most of our partner lines of credit have no draw fee and no monthly maintenance fee. You only pay when you use the funds.

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Business Line of Credit

Revolving credit you can draw from anytime - only pay for what you use.

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Amount

$5,000 – $250,000

Speed

Approved in 1–2 business days

Best for

Businesses that want a safety net for inventory, payroll gaps, seasonal swings, or unexpected opportunities.

Overview

A business line of credit works like a credit card for your business: you get approved for a maximum amount, then draw funds whenever you need them. You only pay interest on the portion you actually use, and as you repay, your available credit replenishes.

How it works

1Pre-qualify and get approved for your credit limit.
2Upload bank statements and business documents.
3Once approved, draw funds anytime from your dashboard - money hits your bank in hours.
4Pay interest only on what you've drawn.
5Repay on a weekly or monthly schedule; available credit refills as you pay it down.

Pros

Draw funds only when you need them
Interest accrues only on the drawn balance
Replenishes as you repay
Ideal for managing cash-flow timing

Things to consider

Lower maximum limits than a term loan
Requires consistent revenue to stay open

Who qualifies

6+ months in business
$10,000+ in average monthly revenue
U.S. business bank account
Credit score of 600+ for best terms

Deep dive: Business Line of Credit

What is a business line of credit?

A business line of credit is revolving capital - you're approved for a maximum credit limit, and you can draw any amount up to that limit at any time. Interest only accrues on the balance you actually have outstanding, and as you pay it back, your available credit replenishes. It functions much like a credit card for your business, but with much lower rates, no swipe fees, and direct ACH transfers into your bank account in hours.

Draw, repay, repeat

Once approved, you can draw funds from your Lendpilot dashboard with a few clicks. Funds typically arrive in your business bank account the same business day. Each draw is repaid on a weekly or monthly schedule over a 6–18 month payback. The moment your draw is paid down, that credit becomes available again - no reapplication required. This makes a line of credit the single most flexible tool in a small business owner's financial toolkit.

Cost

Lines of credit are priced with an APR, not a factor rate. Typical APRs range from 12% to 36% depending on credit and revenue. Most partners charge no monthly maintenance fee, no draw fee, and no early-payoff penalty - so the cost of keeping it open and idle is zero.

When a line of credit is the right call

If your capital needs are uncertain in timing or amount - covering a payroll gap, jumping on a sudden inventory deal, smoothing seasonal swings, or having a safety net for unexpected repairs - a line of credit almost always beats a term loan or cash advance. You're not paying interest on capital you haven't used, and you're not locked into a fixed payment for funds you may not even need.

Common use cases

Cash-flow smoothing

Bridge the gap between sending invoices and getting paid by larger clients.

Seasonal businesses

Draw down for inventory ahead of Q4, repay through the holiday season, repeat next year.

Emergency repairs

Replace a broken HVAC, oven, or vehicle the day it breaks - no waiting on approval.

Opportunistic spending

Take on a new contract that requires upfront materials or hire fast for a growth spurt.

Example pricing

Illustrative only - your actual offer depends on your profile and is shown after pre-qualification.

Credit limit: $50,000
Sample draw: $20,000
APR on drawn balance: 24%
Repayment term: 12 months
Monthly payment on draw: ~$1,890

What you'll need

Last 3 months of business bank statements
Government-issued ID for each 20%+ owner
Voided business check
Basic business info (EIN, formation date, industry)

Frequently asked questions