Most business financing hands you one lump sum and a payment schedule. A line of credit works the other way around. You are approved for a limit, you draw only what you need when you need it, and as you pay the balance down the room comes back. That makes it the closest thing a small business has to a cash reserve it does not have to fund itself. fundivi offers business lines of credit from $10K to $1M, and this guide explains how they work, when they are the right tool, when they are not, and how to use one without letting it quietly become a problem.
You may also see the same product called a business credit line, a revolving line, or a credit facility. They describe the same thing, a limit you borrow against repeatedly, and this page covers all of them. If your business has been open for 6 months or more, brings in $30K or more in monthly revenue, and the owner has a personal credit score of 550 or higher, you can see what limit you qualify for in a couple of minutes.
How a Line of Credit Actually Works
Three ideas explain nearly everything about a line. The first is the limit, the most you can owe at any one time. The second is the draw, the amount you actually pull out on a given day. The third is replenishment, which means that when you repay a draw, that amount becomes available again.
Say you are approved for a $150,000 limit. You draw $40,000 to buy inventory ahead of a busy season. You now owe $40,000, you have $110,000 still available, and your cost is based on the $40,000, not the $150,000. Three weeks later a large customer pays you and you repay $25,000. Your balance falls to $15,000, and $135,000 is available again. At no point did you reapply, and at no point did you pay for money you were not using.
That last point is the real appeal. With a term loan, you pay for the whole amount from day one, whether or not you needed all of it yet. With a line, the cost follows your actual usage.
A Line of Credit Compared With the Alternatives
Owners often arrive at a line of credit after being told to consider a term loan or a business credit card, so it helps to see the differences plainly.
A term loan is best when you know the amount and the purpose, such as buying a vehicle or funding a build out. You receive the money once and repay it on a fixed schedule. It is predictable, but it is not flexible. If you borrow $100,000 and later realize you needed $130,000, you start over.
A business credit card is convenient for small, routine purchases and can come with rewards, but limits are usually modest, and cards are a poor fit for payroll, supplier deposits or large inventory orders. A line of credit typically gives you more room and is usable by wire or transfer, which makes it practical for expenses a card cannot cover.
Working capital sits between the two. It is a lump sum like a term loan, but built for operating needs and often decided and funded the same day. If you want money in hand today for a one time gap, working capital may fit better. If you want standing access you can use repeatedly over many months, a line fits better.
When a Line of Credit Is the Right Tool
A line shines when the need is real but the exact amount or timing is uncertain. Common examples include:
Uneven receivables. You deliver work in March and are paid in May, but payroll arrives every two weeks. A line covers the gap and then refills when the invoice is paid.
Seasonal swings. A landscaper buys supplies and hires crews in early spring, long before the revenue peak. A retailer stocks up in the fall and recovers the cost in the holidays. A line lets you borrow into the build up and repay out of the peak.
Opportunities that appear without warning. A supplier offers a volume discount that expires Friday. A competitor closes and a lease opens up. Having a line already approved means you can act in a day instead of applying from scratch.
A cushion for ordinary surprises. Equipment breaks, a customer pays late, an insurance deductible lands. A line you rarely touch is cheap insurance against all of them.
When a Line of Credit Is the Wrong Tool
A line is not always the answer, and being honest about that saves owners money. It is a poor fit for a large, one time purchase with a long useful life, like a delivery truck or a piece of production equipment. Financing that asset with equipment financing lets the term match the life of the asset and keeps your line free for operating needs.
It is also a poor fit if you already know you will not repay it quickly. A line used to cover a permanent loss of margin, not a timing gap, tends to stay drawn, and a balance that never falls is just an expensive loan with no end date. And if what you need is a known amount for a known event, such as closing on a property before a sale completes, bridge capital is built for exactly that.
What a fundivi Line of Credit Looks Like
fundivi's business line of credit runs from $10K to $1M, and decisions typically take 1 to 3 days. That timing is slower than same day working capital because setting up a revolving facility involves more review, so if you need cash today and a line is not yet in place, working capital or a term loan is the faster path. If you are planning ahead, set the line up before you need it.
The requirements are straightforward: 6 months in business, an active business checking account, $30K or more in monthly revenue, and a personal FICO score of 550 or higher. fundivi is a hybrid lender, which means your application is matched first against fundivi's own capital, and if a different structure fits better, a vetted partner in the network can take it from there without you starting over.
How Underwriting Treats a Revolving Line
Because a line stays open, lenders care about how your cash moves over time, not only how it looked in a single month. fundivi's underwriting engine reads your bank activity for patterns that matter to a revolving facility: how steady your deposits are, how often your balance dips to near zero, whether there are repeated overdrafts, and how your revenue behaves through the year.
A credit score is part of the picture, but it is not the whole of it. A business with a middling score and clean, steady deposits can look stronger than one with a higher score and erratic cash flow. The practical advice is to keep your business account tidy before you apply. Avoid commingling personal and business spending, and let deposits run through the account you will submit.
Draws, Repayment and the Cost of Using a Line
When you draw, you owe interest on the drawn amount, and repayment follows a schedule defined in your agreement. Because terms differ from one offer to the next, ask three questions before you sign. How often are payments taken? Is there a fee to draw, a maintenance fee, or a fee for unused credit? What happens to the limit if I pay the balance to zero and leave it that way?
Then put numbers on it. A line looks inexpensive when you use it for two weeks and expensive when it sits drawn for a year. Our cost calculator lets you model different draw sizes and repayment speeds so you can see what a typical month of use would really cost you before you commit.
Using a Line Without Overextending
The same flexibility that makes a line useful makes it easy to misuse. A few habits keep it working for you.
Match draws to purposes you can name. Before you pull money, be able to say what it is for and where the repayment will come from. A draw to cover a known receivable is healthy. A draw to cover a vague shortfall month after month is a warning.
Pay down when cash arrives. Treat each large customer payment as a prompt to reduce the balance. Doing so lowers your cost and restores your available room for the next surprise.
Keep a margin. If you routinely run the line to its limit, you have no cushion left and nothing for a real emergency. Many owners aim to keep a meaningful share of the limit unused.
Watch the trend, not the number. A balance that rises and falls with your business cycle is normal. A balance that only rises is a sign to talk about a different structure.
Growing a Line Over Time
A well managed line can become more useful as your business grows. If you have drawn and repaid cleanly for several months, your record gives you a stronger case for a higher limit. Increasing the limit makes sense when you are consistently using a large share of it for productive purposes and your revenue has grown to support more. It does not make sense when the usage is driven by a persistent cash shortfall.
You can also pair a line with other products. Many owners use a line for flexible operating cash and equipment financing for a specific machine, so each need is financed with the tool that suits it. A conversation about the whole picture, which you can start by booking a consultation, is often more useful than choosing one product in isolation.
What to Have Ready Before You Apply
Preparation speeds the decision. You will generally want your most recent three or more months of business bank statements, a recent tax return or financial statements if requested, basic details about the business and its ownership, and a clear idea of how you expect to use the line. If you are unsure which product to apply for, the funding product matcher asks a few questions about your business and points to a likely fit. You can also read more about how the process runs on the how it works page, learn who is behind the company on the about page, or browse our resources for other guides.
Frequently Asked Questions
Do I pay interest on the whole limit or only what I draw?
The cost follows what you draw. If your limit is $150,000 and you have drawn $20,000, the interest is based on the $20,000. Always confirm any maintenance or unused line fees in your written agreement.
Can I use the line again after I pay it down?
Yes. That is the defining feature. As you repay, the available amount is restored, subject to the terms of your agreement.
How fast can I get a line of credit?
Decisions on fundivi lines of credit typically take 1 to 3 days. If you need money today, same day working capital may be the faster route while you set up a line for the future.
What credit score do I need?
fundivi looks for a personal FICO score of 550 or higher, along with 6 months in business, an active business checking account and $30K or more in monthly revenue. Cash flow carries a lot of weight alongside the score.
Is a business credit line different from a business line of credit?
No. Credit line, line of credit and revolving line are different names for the same product.
What happens if I do not use the line for a long time?
Terms vary by agreement, so ask about inactivity and any fees. Many owners keep a line open as a safety net precisely because it costs little when unused.
Can I have a line of credit and a term loan together?
Often yes. Many businesses use a line for flexible operating needs and a term loan or equipment financing for a defined purchase. Your total obligations will be reviewed as part of underwriting.
Next Steps
A line of credit is most valuable when you set it up before you are in a hurry. If your business has been open for 6 months or more, brings in $30K or more in monthly revenue, and the owner has a personal credit score of 550 or higher, take the 2 minute application to see what limit your business could qualify for.
