Compare a recurring cash-flow solution
Business Line of Credit: Requirements, Fees and Draw Costs
A business line of credit can cover the gap between paying bills and collecting customer payments. Before applying, check how each draw is repaid, what it costs and whether the business can bring the balance down. A higher limit is useful only if repayment is affordable.
Discuss business fundingFunding specialists, not a lender. No approval guarantee.
Updated October 28, 2026
When to explore funding
- A recurring inventory, payroll or customer-payment gap has a clear repayment source.
- Your forecast shows when borrowing rises and when customer collections reduce it.
- You can supply business financial records and explain existing financing.
Pause and reassess when
- New borrowing repeatedly pays an operating loss or another financing payment.
- A long-lived asset needs a repayment period the credit line cannot support.
- Your plan depends on automatic renewal, instant transfers or an unchanged limit.
Requirements: check the particular lender
There is no single credit score, revenue figure or trading history that qualifies a business everywhere. As a provider-specific example, Chase currently lists annual business revenue of at least $100,000 and a FICO score of at least 660, alongside other conditions. Those are Chase requirements, not Nowbiz eligibility rules or an approval promise. Ask each provider about its requirements, credit checks, geographic coverage and ownership criteria before sending an application.
Understand what happens after each draw
Some facilities charge variable interest on the outstanding balance. Others turn draws into separate installment loans with scheduled fees. American Express describes installment loans with monthly loan fees; multiplying one monthly fee by twelve does not reliably describe an amortizing loan as APR. Ask for the exact draw agreement, every due date, the total amount payable and the effect of early repayment. The approved limit and the money available to draw today can differ.
Compare the cash cost for your actual use
Request quotes using the same draw amount and expected repayment date. Include draw charges, maintenance or annual fees and any early-payment conditions. A fee that looks small against the full credit limit can be large against a short draw. The example below uses an invented interest-only facility and a separately paid draw fee to make that effect visible. It is not a lender quote, a market-average rate or an APR calculation.
Plan for a late-paying customer
Write down collections and essential outgoings by week. If you expect a customer to pay in 30 days, also calculate the cost and cash balance if payment arrives in 60 days. Check that payroll, tax and existing debt payments still fit. If repayment depends on one uncertain invoice, ask whether invoice financing is appropriate and what happens if the customer disputes the invoice. Do not assume a credit line can be increased to cover a missed collection.
Read security, guarantees and renewal terms
Ask which business assets secure the facility and whether an owner must provide a personal guarantee. A lien on business assets is security even when no particular machine or building is pledged. Record the review date, required financial reports, any period when the balance must return to zero, and the conditions for reducing or suspending availability. Confirm the transfer cutoff and settlement time; an open line does not guarantee instant access.
Choose the next step that fits the need
For a defined equipment purchase, compare a term loan or equipment financing over the asset’s useful life. For recurring collections gaps, a line may offer useful flexibility. If your existing bank offers a suitable facility, a direct conversation may be sufficient. Nowbiz can help organize the business need and compare structures when you want assistance; lenders set eligibility, pricing and approval. We do not represent the example providers as partners.
Work through the numbers
| Repayment timing | Interest | Draw fee | Total cash paid including principal |
|---|---|---|---|
| 30 days, principal repaid at the end | $295.89 | $400.00 | $20,695.89 |
| 60 days, principal repaid at the end | $591.78 | $400.00 | $20,991.78 |
Interest = $20,000 × 18% × days ÷ 365. No interim principal payments, compounding, annual fee or other charges are assumed. Total cost above principal is $695.89 or $991.78. Actual products may amortize, use another day-count convention or charge scheduled fees.
Prepare the file
Prepare a useful funding file
Keep sensitive records for the protected application process when requested. Do not email identity or financial documents.
- Business registration and ownership details; provide identity documents only through the protected process when requested.
- Recent business bank statements for the period the provider requires.
- Current profit-and-loss statement and balance sheet; tax returns if requested.
- A schedule of loans, leases, advances, guarantees and existing security interests.
- Receivables and payables aging, including disputed or overdue customer balances.
- A short forecast showing the requested draw, its purpose and the expected repayment source.
Business funding inquiry
Discuss your business cash-flow gap
Tell us the amount needed, what it pays for and when the business expects to repay it. Include existing financing when a specialist follows up. Do not send account numbers or financial documents through the inquiry form.
Submitting an inquiry does not commit you to financing. Ask about any later credit checks, fees and provider conditions before proceeding.
Common questions
Useful answers before you begin.
What credit score do I need for a business line of credit?
Requirements vary by provider and product. A published minimum is only one eligibility condition and does not guarantee approval. Compare the provider’s current requirements with your revenue, existing debt, cash flow and credit history.
Do all business lines of credit charge interest only?
No. Some use interest on the outstanding balance; others charge scheduled fees on installment loans created by draws. Read the cost and repayment terms of the specific facility.
Can an unused line still cost money?
Yes. Annual, maintenance or other fees may apply even without a balance. Ask for the full fee schedule and any waiver conditions.
Does repaying a draw restore my borrowing limit?
It can restore availability under a revolving agreement, subject to the facility terms, payment clearance and continued eligibility. Confirm when funds become available again.
Is a business line of credit unsecured?
It depends on the contract. Ask about a business-asset lien, collateral and personal guarantees separately. No specified equipment collateral does not mean there is no security or owner liability.
How quickly can I use the money?
A new application and a draw on an existing facility are different steps. Underwriting, verification, transfer cutoffs and bank settlement affect timing. Obtain the provider’s estimate for your request rather than relying on instant-funding language.
What should I tell Nowbiz first?
Give the business location, approximate amount, purpose, timing and current financing obligations. The initial inquiry helps establish fit; it is not a lender approval or a commitment to borrow.