Draw funds when you need them
Business Line of Credit
A business line of credit is a revolving facility with a set limit that you can draw from, repay and draw again. You only pay interest on the amount you've drawn, for as long as it's outstanding, which makes it a flexible alternative to an overdraft.
Funding Plus compares revolving credit facilities from online lenders and banks, so you have funds ready for the gaps between paying out and getting paid.
- Pay interest only on what you use
- Draw and repay as often as you need
- Often available within days
Reviewed by the Funding Plus team · Last updated October 2026
Step 1 of 3 · Business Lines of Credit
How much do you need?
Takes about a minute. No impact on your credit score.
Business Lines of Credit at a Glance
- Limits
- £5k – £500k
- Facility term
- 12 – 24 months, renewable
- Decision
- 1 – 5 days
- Security
- Usually none
- Best for
- Ongoing cash flow gaps
Typical figures across the market. Your offers depend on your business, the lender and the security available.
How Business Lines of Credit Work
- 1Agree a limitThe lender sets a maximum based on your turnover and trading history.
- 2Draw what you needMove funds to your account through an online dashboard, often instantly.
- 3Repay over a set periodEach drawdown is usually repaid over a few months.
- 4Reuse your limitAs you repay, the money becomes available to draw again.
How Much Do Business Lines of Credit Cost?
Interest is charged only on the amount drawn, usually as a monthly rate. Some lenders also charge a fee per drawdown or a small fee on the unused limit, so compare the full cost.
- Interest on drawn balances only
- Possible drawdown or facility fees
- Usually no early repayment charges
- Limits reviewed and renewed each year
Worked example
Drawing £20,000 from a £50,000 line
- Credit limit
- £50,000
- Amount drawn
- £20,000
- Monthly rate
- 1.5% on the drawn balance
- Time outstanding
- 3 months
- Interest paid
- £900
- Interest on unused £30,000
- £0
Illustrative only, not a quote. Assumes the full £20,000 is outstanding for 3 months and no fees.
Who Can Get Business Lines of Credit?
- A UK limited company or LLP (some lenders accept sole traders)
- Usually 12 months' trading or more
- Regular turnover through a business bank account
- A credit profile the lender can accept
- A personal guarantee from directors for most facilities
What You'll Need to Apply
- Open banking access or 6 months of bank statements
- Latest accounts
- Director ID
Pros and Cons of Business Lines of Credit
Advantages
- Interest only on what you use
- Funds available instantly once set up
- Reusable, unlike a one-off loan
- Doesn't depend on your bank's overdraft
Things to watch
- Rates can be higher than term loans
- Limits can be reduced at review
- Easy to rely on for long-term needs
- Personal guarantees are common
Line of Credit vs Overdraft
Business line of credit
Separate facility, often from a specialist lender, with each drawdown repaid over a set period.
Business overdraft
Attached to your bank account and repayable on demand. Your bank can reduce or withdraw it at short notice.
Invoice finance
A facility that grows with your sales, secured on unpaid invoices.
See invoice financeBusiness Lines of Credit vs Other Options
| Option | Best for | Typical speed | Security |
|---|---|---|---|
| Business line of credit | Repeat short-term needs | 1 – 5 days | Usually none |
| Unsecured business loan | One-off costs | 1 – 5 days | None (guarantee usual) |
| Invoice finance | B2B firms with unpaid invoices | 1 – 3 weeks to set up | Your invoices |
| Merchant cash advance | Card-taking businesses | 1 – 5 days | None |
Who Uses Business Lines of Credit?
Lines of credit suit businesses with regular but uneven cash flow.
Customer story
“[Real customer story for Business Lines of Credit: what they needed, how quickly it was arranged and what it let them do.]”
[Name], [Role], [Business name] · [Amount] business line of credit
Business Lines of Credit FAQs
How is a line of credit different from a loan?
A loan gives you one lump sum. A line of credit lets you draw what you need, repay it and draw again, paying interest only on what you use.
Is it the same as an overdraft?
Similar, but it's usually a separate facility with set repayment periods for each drawdown, and it isn't repayable on demand like most overdrafts.
How quickly can I draw funds?
Once the facility is set up, many lenders transfer funds within minutes or the same day.
Will my limit change?
Lenders review limits, usually yearly. Strong trading can increase your limit. Weaker figures may reduce it.
Do I pay anything if I don't use it?
Some facilities charge a small fee on the unused limit. Many charge nothing until you draw.
Related Guides
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