A business line of credit is a type of financing arrangement where you can borrow funds several times until you reach a fixed credit limit. Many business ventures come without a definite price tag, and a credit line gives you the option to adjust how much finance you use.
Why choose a line of credit instead of a traditional loan? With a credit line, you have more control over the final cost of borrowing. Each drawdown becomes a separate loan, and interest is charged only on what you have withdrawn—not on the full credit limit. This is a valuable feature if you want to draw down less than previously planned and not have to pay for the unused funds.