Glossary
Business line of credit
A revolving limit you can draw, repay, and redraw.
A revolving credit limit you can draw against, repay, and draw again, paying interest only on the drawn balance plus any draw or maintenance fees. It fits recurring, temporary needs. How lines work, secured vs. unsecured, and the fees that matter.
How it appears in a contract
A line agreement stating limit, rate (often variable), draw fees, repayment terms, review period, and collateral or guarantee.
Worked example
A $50,000 line drawn $20,000 for 60 days at 14% costs about $460 in interest plus any draw fee.
Illustrative figures on stated assumptions; not quotes.
What to ask
- Draw fees and maintenance fees?
- Variable rate margin and cap?
- When is the line reviewed and can it be reduced?
Related terms
Working capital · APR (annual percentage rate) · UCC-1 · Credit pull · all terms
Educational definitions, not legal advice. Contract terms and their legal treatment vary by provider and state; read your agreement and ask a professional.
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