Business Line of Credit Loan

Written by True Tamplin, BSc, CEPF® | Reviewed by Editorial Team

Updated on December 13, 2022

A business line of credit is different from a business loan. A loan is a lump sum, whereas a line of credit is an ongoing stream of funds, like a credit card. Lines of credit only charge interest on funds that are spent, rather than the whole amount.

Business Line of Credit Loan Forms

The forms needed for a business line of credit application vary from lender to lender, but you can expect to need some or all of the following:

  • Driver's license or another form of ID
  • Bank statements
  • Balance sheet
  • Profit and loss statements
  • Credit scores
  • Business tax returns
  • Personal tax returns

Traditional Line of Credit Business Loan Description

A business line of credit is an ongoing stream of funds granted to businesses by a lender, traditionally banks. The line of credit works like a credit card; businesses have a credit limit, are charged interest on the amount that they spend, and must pay back funds before they can be spent again.

Business Line of Credit Loan FAQs

What is a line of credit?

A line of credit is money lent to an individual or business. If a line of credit is revolving, then the line of credit will replenish as the borrower pays back money borrowed.

What does LOC stand for?

The acronym LOC stands for Line of Credit.

What is a revolving line of credit?

A revolving line of credit is one which replenishes when the loan is paid off. An example of this is a credit card. A non-revolving line of credit closes once the loan is paid off, such as a student loan.

What's the difference between a line of credit and a loan?

A loan is typically a lump sum whereas a line of credit is typically revolving which allows for the borrower to draw, repay, and again draw as needed.

About the Author

True Tamplin, BSc, CEPF®

True Tamplin is a published author, public speaker, CEO of UpDigital, and founder of Finance Strategists.

True is a Certified Educator in Personal Finance (CEPF®), author of The Handy Financial Ratios Guide, a member of the Society for Advancing Business Editing and Writing, contributes to his financial education site, Finance Strategists, and has spoken to various financial communities such as the CFA Institute, as well as university students like his Alma mater, Biola University, where he received a bachelor of science in business and data analytics.

To learn more about True, visit his personal website, view his author profile on Amazon, or check out his speaker profile on the CFA Institute website.

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