Business lines of credit work similarly to a credit card in that a bank or other lender gives you access to a set amount of funds that you can draw from and use at any time.
When you draw from your credit line, therefore, you can use the funds for any business purpose—and you repay what you’ve borrowed, plus interest. Unlike a traditional term loan, however, you only pay interest on the funds when you use them.
Plus, in most cases, business lines of credit are revolving—once you’ve repaid what you’ve borrowed, your credit line resets to its original limit and you can continue to pull from the line as needed.