What is a line of credit?
A line of credit is a flexible funding option that allows you to borrow up to an agreed limit whenever you need it. You can draw down funds, repay them, and then borrow again, which makes it useful for ongoing or unpredictable expenses. You only pay interest on the money you use, not the full facility, giving you control and flexibility over your borrowing.
What can a line of credit be used for?
- - Covering day-to-day business expenses
- - Managing uneven cash flow
- - Taking advantage of short-term opportunities
- - Paying suppliers or bills when timing is tight
Pros
Draw funds when needed, repay, and borrow again
Pay interest only on the amount you use
Can be obtained quickly
Cons
Risk of overusing it for non-essential expenses
Credit limits may be lower than lump-sum loans
Rates can be slightly more expensive than a business loan
