Commercial Finance Education
A business line of credit is a revolving facility that gives companies flexible access to funds. The lender approves a credit limit; the borrower draws as needed, repays, and can draw again. Interest is typically charged only on the amount drawn.
Unlike a term loan that provides a lump sum, a line of credit offers flexibility. Businesses with unpredictable or recurring short-term needs often prefer lines because they pay interest only on what they use.
Lines of credit work like a credit card for the business: there is a limit, and the borrower can draw up to that limit, repay, and draw again. The facility remains open as long as the borrower meets the terms. This structure suits seasonal businesses, contractors between projects, and companies that need a cushion for unexpected expenses.
Banks and credit unions often offer lines but may have stricter credit requirements. Alternative lenders may consider broader profiles. When a bank declines a line of credit request, brokers and advisors can refer the deal to a referral partner network for second look. See declined deals for context. No approval is promised.
Understanding the difference helps brokers and advisors match clients to the right structure:
Businesses use lines for working capital, inventory purchases, payroll during slow periods, seasonal gaps, and short-term cash flow needs. A retailer might draw before the holiday season and repay after sales. A contractor might draw between projects and repay when progress payments arrive. The flexibility is the main advantage.
Eligibility varies by lender. Revenue, credit profile, time in business, and cash flow are typical factors. Deals declined by one source may be evaluated differently elsewhere. Brokers with a signed referral agreement can send declined business loans for review.
Seasonal business. A landscaping company has strong revenue in spring and summer but needs to cover overhead in winter. A line of credit allows draws during the slow season and repayment when business picks up.
Contractor between projects. A general contractor wins a large project but must pay subcontractors before receiving progress payments. A line provides interim funding until the first draw.
Bank decline. A business owner applied for a bank line and was declined due to credit or industry. The CPA refers the client to a referral partner. Alternative lenders with different guidelines may evaluate the deal.
Exposure cap. A business has an existing line but has maxed it out. The primary lender will not increase exposure. A second line from another source may be an option depending on structure and profile.
Brokers refer line of credit deals when they fall outside their primary lender box. CPAs and consultants refer clients who were declined by a bank. Vendors refer customers who need revolving working capital. The common thread: a need for a different evaluation than the first lender provided.
Second look is not a guarantee. Send declined business loans and hard-to-place line of credit requests through the referral process. Review the referral agreement before submitting. See declined deals for more on how these situations are handled.
Submit borrower and request details by email.
We evaluate the opportunity and identify possible funding paths based on multiple factors.
Partners stay informed throughout the process.
When a deal closes, partners may receive 35% revenue share per the agreement.
FAQ
A business line of credit is a revolving facility. The lender approves a credit limit; the borrower draws funds as needed, repays, and can draw again. Interest is typically charged only on the amount drawn, not the full limit.
A term loan provides a lump sum with fixed repayments over a set period. A line of credit provides flexible access—draw when needed, repay, and reuse. Lines suit ongoing or unpredictable needs; term loans suit one-time purchases or projects.
Eligibility varies by lender. Factors include revenue, credit profile, time in business, and cash flow. Banks often require stronger credit; alternative lenders may consider broader profiles. No approval is guaranteed—each deal is evaluated on its merits.
Yes. Brokers, CPAs, vendors, and advisors with a signed referral agreement can submit declined line of credit deals for second look review. The financing partner evaluates the opportunity; approval depends on multiple factors.
Working capital, inventory, payroll, seasonal gaps, and short-term cash flow needs. Businesses use lines for flexibility when timing of expenses and revenue does not align. Uses vary by business and industry.
Referral partners submit declined deals through the referral partner process. Review the referral agreement, sign it, then send deal details. See send declined business loans and declined deals for more information.
Have a declined line of credit deal?
Review the referral agreement, sign it, and submit opportunities for evaluation.
