A business line of credit is a flexible business loan that works similarly to a business credit card. Borrowers are approved up to a certain amount and can draw on their line of credit as needed, paying interest only on the amount actively borrowed. Funds are typically accessible through a business checking account or mobile app.

Unlike a traditional or term business loan, which disburses funds in a lump sum at one time and is repaid with interest, a business line of credit is renewable. As the borrower makes repayments, the amount of credit available is refreshed, similar to payments toward a credit card limit. Business lines of credit are typically approved for several months or up to several years, depending on the lender. Many entrepreneurs use several methods to fund their small businesses, including debt, equity and free funding, such as small-business grants.

The right option for you depends on how established your business is, as well as other factors, such as why you need capital and how fast you need it. IRetireYou.com will review the ways you can get small-business funding and provide information to help you decide which method is best for your needs.