How does a business line of credit work?
Member since 2025 · 22 posts · 2 votes
Unlike a traditional term loan where you receive a lump sum and pay interest on the full amount immediately, a line of credit functions as revolving capital. You draw only what you need, pay interest solely on the balance used, and as you pay it down, those funds become available again for operational needs, emergency reserves, or immediate growth opportunities.
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