How a Business Line of Credit Works: Draws, Rates, Renewal & Requirements

How a Business Line of Credit Works: Draws, Costs, Renewals and Who Qualifies

A business line of credit is a limit you can draw from as needed. You pay only on what you've drawn, and as you repay, that money becomes available again.

How Draws Work

Say you're approved for $150,000. You draw $40,000 for payroll in a slow month. You pay on the $40,000 only. As you repay it, your available balance climbs back toward $150,000. Many lines fund draws within one business day once the line is open.

Revolving vs. Non-Revolving

Revolving: repaid funds become available again for the life of the line.
Non-revolving / draw-period: you can draw for a set period, then each draw repays on its own fixed schedule.

Some fintech lines treat each draw as its own short loan with a fixed payback. Ask how each draw is repaid before you sign.

What It Costs

Pricing depends on credit, revenue, and the lender. Watch for draw fees, monthly maintenance fees, and inactivity fees in addition to the rate. Our lines run $10,000 to $5,000,000 with terms from 6 months to 10 years.

Renewals and Reviews

Most lines are reviewed, often once a year. Strong deposits and on-time payments can raise your limit. Falling revenue, new debt, or missed payments can shrink or freeze the line. That's why a line works best when you open it before you need it.

Who Qualifies

6+ months in business
$10,000+ in monthly revenue
About 550+ FICO preferred
3 months of recent business bank statements

Line of Credit vs. Working Capital Loan

Line of credit: repeat or unpredictable needs — seasonal swings, slow-paying customers, repairs.
Working capital loan: one known need with a clear dollar amount — inventory order, new location, a hire.

Many owners keep both: a term loan for a project and a line for surprises. If your cash is tied up in B2B invoices, invoice factoring may fit better than either.

See our business line of credit program, or see what line size you qualify for. We're paid by the capital provider only when your financing funds — no separate fee to you.

Ranges reflect typical market practice, not quotes. Rates, amounts, and terms vary by capital provider and business, and every offer is subject to underwriting and approval.

California Business Capital | Fresno, California | info@cabizfunding.com | 559-549-4717

How a Business Line of Credit Works: Draws, Costs, Renewals and Who Qualifies