Do I pay anything if I never draw?

It depends on the agreement. Many lines charge only when you draw, but some have maintenance or renewal fees. Ask for every fee in writing before you accept the limit.

How fast does the limit refresh after I repay?

Usually as payments post, the repaid principal becomes available again. The exact timing depends on the agreement, so confirm it if you plan to draw again soon.

Can a newer business get a line of credit?

It is harder. MFE's guideline for lines usually points to a year or more in business. A newer company may be better matched with a working capital loan or a revenue-based option until it builds history.

Is a line of credit cheaper than a loan?

Often, if you use only part of it, because you pay on what you draw. If you draw all of it right away, a loan with no draw fees can be the lower-cost choice.

What credit score do lines usually need?

MFE considers scores from 500 overall, but its planning guideline for lines commonly points to about 650 or higher. Stronger credit usually means a bigger limit and better pricing.

Business Line of Credit: Draws, Costs and Who Qualifies

The short answer

A business line of credit is a revolving limit you can draw from when you need cash, repay, and draw again. You generally pay costs only on the amount you draw, not the full limit. Because the access stays open, lines usually go to stronger files: MFE's planning guideline commonly points to about $17,500 or more in monthly revenue, at least a year in business and credit around 650 or higher.

Lump sum versus revolving access

A loan hands you the full amount on day one and the payment starts right away, whether you spend the money this week or next quarter. A line of credit works more like a reserve tank. You get approved for a limit, then pull from it in smaller draws when a bill or opportunity shows up.

As you repay a draw, that room usually becomes available again. For a business with uneven needs, such as a wholesaler restocking before holidays or a clinic waiting on insurance payments, that flexibility can cost less than borrowing the full amount up front.

What a draw really costs

Pricing on lines varies, so read the agreement for each of these:

Draw fee: a percentage taken each time you pull money
Interest or finance charge: charged on the outstanding draw, not the unused limit
Repayment period per draw: many lines set a fixed number of weekly or monthly payments for each draw
Maintenance or renewal fees: some lines charge to keep the limit open

A line with no draw fee but a short repayment period can strain cash more than one with a small fee and a longer period. Look at the payment, not just the price.

Check what your business qualifies for

Merchant Fund Express reviews business line of credit requests from $5,000 to $5,000,000. Scores from 500 are considered, and same-day decisions are common on complete files.

Check funding options with Merchant Fund Express

Who qualifies and who should look elsewhere

Good fit: a business with a year or more of history, steady revenue around or above $17,500 a month, decent credit and needs that rise and fall during the year.

Weaker fit: a startup, a business with credit well under 650, or one that needs one large sum for a single purchase. A one-time need is usually better served by a working capital loan. A business with thinner credit or a short history may find a revenue-based product more reachable, as covered in business funding with bad credit.

Worked example: one draw on an $80,000 line

Illustrative example. These figures are illustrations built on stated assumptions, not offers. Real pricing depends on the file MFE reviews.

Assumptions: a medical billing company with about $45,000 in monthly revenue has an $80,000 limit. It draws $25,000 to cover payroll while a large client pays late. The draw carries a 2% fee and an assumed finance charge of $2,250, repaid over 26 weekly payments.

Item	Amount
Approved limit	$80,000
Amount drawn	$25,000
Draw fee (2%)	$500
Net cash received	$24,500
Total repayment ($25,000 + $2,250)	$27,250
Weekly payment ($27,250 / 26)	$1,048.08
Cost of this draw	$2,750

The other $55,000 sits unused and, in this example, costs nothing. If the business had taken an $80,000 loan instead, it would pay on money it did not need.

Funding brings customers. Is your website ready for them?

A line of credit is most useful when you can act fast on a new client or a seasonal rush, and new clients usually check your website before they call back. Keep your services and proof of work current so the opportunity you are funding actually converts. Cheap Cheap Websites builds professional sites from $399, and Website Care at $30/month handles hosting, backups and small edits.

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How to apply and what to have ready

Gather 3 to 4 months of business bank statements.
Have your ID and a voided business check ready.
Complete the short application on the MFE business line of credit page.
For larger limits, expect requests for financial statements or tax returns.

Decisions on complete files are often same day, with funding commonly the next business day. That is typical, not promised.

When a line is not the right tool

If you will draw the full limit the day it opens and keep it maxed out, you are really using a term loan with extra fees. Pick the loan. If your customers are businesses paying on 30 to 90 day terms, invoice factoring may match the cash gap more closely. And if your credit is below the usual range today, building six more months of clean statements before applying can produce a better limit later.

Related funding guides

Working capital loans Invoice factoring How much can my business borrow Business funding with bad credit Business line of credit at Merchant Fund Express

Cheap Cheap Websites builds websites. It does not lend or make funding decisions. Funding is offered by our funding partner, Merchant Fund Express, and every request is subject to its review and approval. Figures on this page are illustrations, not offers. Updated October 15, 2026.

A business line of credit gives you money on standby, not a lump sum