Business lines of credit
$20,000 to $1,000,000. Draw it when stock or wages land, repay when cash comes in, and only pay for what you actually use.
A business line of credit is a revolving facility, the lender approves you to a limit, you draw down what you need, and you only pay interest on the amount actually drawn. Repay it and the limit opens back up, without a new application, which is the thing a fixed-repayment business term loan can’t do.
That flexibility is also where it gets complicated. Not every line of credit on the market works the same way underneath, and the differences sit in the fine print, not the marketing page.
What can you actually use a line of credit for?
Depends entirely on the lender, and this is the single most misunderstood part of the product. Some facilities are genuinely open-purpose working capital. Others are restricted to specific uses, some will only release funds against a supplier payment with an invoice attached, for example, which isn’t how most business owners assume a “line of credit” works when they first ask for one.
- 01Some lines of credit are purpose-restricted, supplier payments with an invoice attached only, not general working capital.
- 02Some won’t let you pay out the principal balance alone, you can incur further charges trying to close it out early.
- 03Some products treat every individual drawdown as its own separate loan. Draw down three times and you can end up with three running repayments each month, not one.
- 04Read the contract for exclusivity clauses. Some lenders prohibit taking on any other working capital finance while their facility is live, breach it and they can foreclose and demand the full outstanding balance back within 30-90 days.
None of that is universal. Plenty of lines of credit on our panel behave much more like a traditional overdraft (draw, repay, draw again, one simple facility), without any of the four traps above. The point isn’t that lines of credit are risky; it’s that “line of credit” isn’t one standardised product, and the difference matters more than the headline rate.
Is a line of credit secured or unsecured?
Same tiering as our other facilities. Under $250,000, security is usually a director’s guarantee, and the better-priced lenders on our panel will often still want a general security agreement over business assets alongside it. Some lenders will extend a line close to that $250,000 mark with no property backing at all, you pay for that in the rate. See our unsecured business loans page for the full picture on what “no security” really covers.
Above $250,000, property security or a caveat over property becomes more common, more so past $1,000,000. A caveat sits behind your existing mortgage rather than replacing it, a smaller ask than most business owners expect.
Illustrative only, not a quote. Your actual position depends on the lender, the amount and how the rest of the business stacks up.
How much can you access, and how does it compare to a term loan?
Business lines of credit on our panel run from $20,000 to $1,000,000. The core difference from a term loan is structural, not just cosmetic: a term loan gives you a lump sum with fixed repayments from day one, while a line of credit gives you standing access you draw against as needed, better suited to a business with genuinely variable cash flow than a one-off purchase.
| Facility limit | $20,000-$1,000,000 |
| Security | Director’s guarantee under $250,000 (some lenders also want a GSA); property security or a caveat becomes more common above $250,000, more so past $1,000,000 |
| Repayments | Interest on the amount drawn, not the full limit, structure varies by lender (see above) |
| Reuse | Repay and redraw without a new application, on most (not all) products |
Some line of credit products treat every individual drawdown as its own separate loan, three draws can mean three separate repayments running each month, not one. It’s in the fine print, not the marketing page.
Why work with a broker instead of comparing lenders yourself?
Because the differences that actually matter on a line of credit (purpose restrictions, drawdown structure, exclusivity clauses), rarely show up on the comparison page you’d find searching on your own. A broker reads the contract terms before you sign, not after a clause catches you out. (More on how a business loan broker actually works.)
There’s also a newer wrinkle worth knowing about: line of credit structures now exist for equipment and asset finance too, not just working capital, and they can run side by side with a working capital facility rather than competing for the same limit. Most business owners researching “line of credit” on their own never find that option, because it’s not what the term usually means on a bank’s website.
Two things people get wrong about lines of credit
“Line of credit” isn’t one product
The name covers everything from a flexible overdraft-style facility to a purpose-restricted, per-drawdown-loan structure with exclusivity clauses attached. Two lenders can call very different products by the same name, always read what you’re actually signing.
Exclusivity clauses have real teeth
Some contracts prohibit taking on any other working capital finance while the facility is live. Breach it (even unknowingly), and the lender can foreclose and demand the outstanding balance back within 30-90 days. Know this before you sign, not after you’ve taken a second facility elsewhere.
What do business line of credit interest rates look like?
Rates vary by lender, facility limit, security offered and how the drawdown structure works, a purpose-restricted facility and an overdraft-style one aren’t priced the same way. This is one of the first things we clarify on a call, alongside how that particular product actually structures repayments. Our line of credit calculator lets you estimate the cost of drawing at different utilisation levels.
Ecommerce Loans is a finance broker, not a lender. Rates and figures shown are indicative only and subject to individual lender assessment.
When is a line of credit not the right call?
If you’re funding a single, specific purchase (a piece of equipment, a one-off stock order), a term loan or asset finance is usually the cleaner and cheaper structure than standing revolving credit. A line of credit is also the wrong fit if your cash flow is so unpredictable that you can’t service repayments on whatever’s currently drawn, or if you’re not confident you’d read a facility’s usage restrictions and exclusivity terms before signing.
If either of those sounds like your situation, say so on the call. Redirecting you to the right product costs us nothing and saves you a facility that doesn’t fit.
Compare this against
Not sure a line of credit is the right shape?
Want the facility attached to your everyday transaction account?
An overdraft does the same revolving job, built directly into the account you already bank with.
See Business overdrafts →Know the exact amount you need and want fixed repayments?
A term loan gives you a lump sum with a set repayment schedule from day one.
See Term loans →Prefer repayments that move with revenue, not a fixed limit you manage yourself?
Revenue-based funding repays as a percentage of what you take, rather than a facility you draw down.
See Revenue-based lending →Want the deeper, side-by-side breakdown? Read Term loan vs line of credit →
How do you actually get a business line of credit?
Tell us the basics (what the funding is for, roughly how much, and your ABN), and we take it to the panel without a formal application or a credit check at that stage. We flag any purpose restrictions or exclusivity clauses on the shortlist before you apply, not after.
Want the numbers first? Try the line of credit calculator →
Run a professional services business? See how finance fits your revenue pattern →
Run an ecommerce business? See how finance changes as you scale →
Run a transport or logistics business? See how finance bridges 30-90 day terms →
Run a trades or construction business? See how finance differs by construction type →
Run a hospitality or retail business? See how finance works in this sector →
New to working with a broker? See how a business loan broker works →
Give us the basics below and Andrew will come back with the two or three offers actually worth your time, usually within a business day.