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Line of Credit
A business line of credit is a revolving credit facility you can draw from as needed, repay, and draw again up to an approved limit.
Definition
What it means.
Lines of credit work like business credit cards in structure but usually offer larger limits, lower rates, and direct ACH draw to your business bank account. You only accrue interest on the drawn balance, not the full limit.
Secured lines are backed by specific collateral (inventory, receivables) and typically carry lower rates. Unsecured lines are backed only by a personal guarantee and creditworthiness. Most small business lines of credit have a 12-month or 24-month review cycle, after which the line may be renewed, increased, or reduced.
Now what?
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