Working capital, on your terms
Business Lines of Credit
A flexible business line of credit gives you access to funds whenever cash flow gets tight or an opportunity appears. Draw only what you need, pay interest only on what you use, and borrow again as you repay.
- Draw only what you need
- Interest on the amount you use
- Reuse funds as you repay
What Is a Business Line of Credit?
A business line of credit is a revolving source of funding. A lender approves you for a credit limit, and you can draw from it as often as you need, up to that limit. When you repay what you borrowed, that amount becomes available again, so you do not have to reapply each time.
Unlike a traditional term loan, which pays out a lump sum on day one, a line of credit lets you borrow in smaller amounts when the need actually comes up. It works well as a safety net for day-to-day operations and as a ready source of funds for growth.
How a Line of Credit Works
- Apply once. Complete one application with your business and financial details.
- Get matched. We present your request to lenders and funding partners in our network.
- Draw when needed. Once approved, take funds from your credit limit as expenses arise.
- Repay and reuse. As you repay, your available credit is restored.
Example for illustration only: if you are approved for a $50,000 limit and draw $15,000 for inventory, interest is calculated on the $15,000 you drew, not on the full $50,000. After you repay $5,000, $40,000 is available to use again. Actual limits, rates, and terms depend on the lender.
Benefits of a Business Line of Credit
- Flexibility: use funds for payroll, inventory, supplies, repairs, marketing, or other business needs.
- Cost control: you pay interest on the amount drawn rather than on the whole limit.
- Ongoing access: once your line is open, funds are available without a new application for each draw.
- Cash-flow cushion: bridge gaps between paying suppliers and collecting from customers.
- Seasonal support: prepare for busy periods and cover slower months.
- Credit building: responsible use and on-time repayment can strengthen your business credit profile where the lender reports it.
Types of Business Lines of Credit
Revolving
Your available credit refills as you repay. This is the most common type and suits ongoing or repeat needs.
Non-revolving
You borrow up to a set amount, and once it is used and repaid, the line closes. It suits one-time or planned needs.
Secured
Backed by collateral such as equipment, inventory, or receivables. This can mean higher limits or lower rates.
Unsecured
No specific collateral is pledged. These can be faster to arrange, but may carry higher rates or lower limits.
Line of Credit vs. Term Loan
| Line of Credit | Term Loan | |
|---|---|---|
| How you receive funds | Draw as needed, up to your limit | One lump sum up front |
| Interest charged on | The amount you draw | The full loan amount |
| Repayment | Based on what you have drawn | Fixed payments over a set term |
| Reusable | Yes, on revolving lines | No, you reapply for new funding |
| Best for | Ongoing needs, cash-flow gaps, uncertain costs | A single, known expense such as a major purchase |
Common Ways Businesses Use a Line of Credit
- Covering payroll during slow weeks
- Restocking inventory quickly
- Paying suppliers while waiting on invoices
- Preparing for seasonal demand
- Handling unexpected repairs or equipment issues
- Taking advantage of bulk-purchase discounts
- Funding marketing and growth opportunities
- Managing taxes and operating expenses
What You May Need to Apply
Requirements differ by lender, but you can usually expect to provide:
- Basic business and contact information
- Recent business bank statements
- Information about your monthly or annual revenue
- Time in business and ownership details
- Tax returns or other financial documents, if requested
- Credit information for the business owner
Having these ready helps your request move faster. Our team will tell you exactly what is needed for your situation.
Understand the Costs
The main cost of a line of credit is interest on the funds you draw. Depending on the lender, there may also be an origination fee, draw fee, maintenance or annual fee, or late fee. Rates can be fixed or variable, and repayment may be interest-only for a period or a mix of principal and interest.
Always review the lender's agreement before you sign, so you know the full cost and repayment schedule.
Why Apply Through AFG Capital Funding?
AFG Capital Funding is a Miami-based finance broker. Instead of sending you from lender to lender, we take your information once and present your request to lenders and funding partners in our network, so you can compare real options.
- One application: no repeating the same paperwork with multiple lenders.
- A network of funding partners: more chances to find terms that fit your business.
- Straightforward guidance: we help you understand each offer before you decide.
- Local, responsive support: reach a real person by phone or email.
Frequently Asked Questions
How does a business line of credit work?
You are approved for a credit limit and can draw funds up to that limit whenever you need them. You pay interest on the amount you draw, and as you repay, your available credit is restored on revolving lines.
Do I pay interest on the full credit limit?
In most cases, no. Interest is generally charged only on the amount you have drawn. Some lenders also charge fees, so review the terms of any offer.
What can I use a line of credit for?
Most lenders allow use for general business purposes such as payroll, inventory, supplies, repairs, marketing, and other operating expenses. Your lender's agreement will list any restrictions.
What is the difference between a line of credit and a business loan?
A business loan typically pays out a lump sum with fixed payments over a set term. A line of credit gives you a limit to draw from over time, with interest on what you use and, on revolving lines, the ability to borrow again as you repay.
Do I need collateral?
It depends on the lender and the product. Secured lines are backed by collateral, while unsecured lines are not. Unsecured options may have higher rates or lower limits.
How do I apply with AFG Capital Funding?
Complete our short application or call us at 305-857-6956. We review your information and present your request to lenders and funding partners in our network. Submitting an application does not guarantee approval.
Ready to Open a Line of Credit?
Tell us about your business and we will help you find flexible funding that fits.
AFG Capital Funding · 3150 SW 38th Ave, Miami, FL 33146 · 305-857-6956AFG Capital Funding is a finance broker, not a lender. Funding is subject to lender approval, and amounts, rates, fees, and terms vary by lender and business. Submitting an application does not guarantee approval or an offer. See our Terms & Conditions and Privacy Policy.