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Business line of credit: flexible working capital for your business

A business line of credit gives your business a limit it can draw on, repay and draw on again while the facility is open. Interest is generally charged only on the amount you use, not the whole limit, so businesses often use it for uneven cash flow and short-term costs. 360 Asset Finance can arrange business lines of credit through its lender panel, subject to the lender's criteria. We're a broker, not a lender, and don't lend our own money.

Last updated 6 November 2026 · Reviewed by 360 Asset Finance Compliance

At a glance

A line of credit is a revolving facility: you draw funds up to a limit, repay them and draw again.
Interest is generally charged on the amount you've drawn, but fees can apply even when you don't use the facility.
It can be secured, for example by property or business assets, or unsecured, often with a director's personal guarantee.
It's generally designed for short-term cash flow needs rather than buying assets or long-term funding.

How does a business line of credit work?

The lender sets a credit limit. You draw funds when you need them, up to that limit, usually by transferring them to your business account. As you repay, the amount you can draw goes back up, so you can use the facility again while it's open. Interest is generally charged only on the amount drawn.

The lender will assess your application against its criteria and sets the limit and the terms.

What do businesses use a line of credit for?

Every business is different, and this isn't a recommendation. In general terms, businesses use a line of credit to:

pay suppliers or wages before customer payments come in;
buy stock ahead of a busy period;
cover an unexpected cost or a quieter trading period.

Because it's revolving, a line of credit isn't designed to fund a long-term purchase. If you're buying a vehicle or equipment, equipment finance is another option, where the asset usually acts as security.

How does a line of credit compare with an unsecured business loan or invoice finance?

Option	How you get the funds	How it's repaid	How the cost is shown	Often used for
Business line of credit	Draw what you need up to the limit, then draw again after repaying.	From your cash flow, within the facility terms.	Interest on what you use, plus fees.	Uneven cash flow, stock and short-term costs.
Unsecured business loan	A lump sum at the start.	Regular repayments over an agreed term.	Interest and fees.	One-off costs such as a fit-out.
Invoice finance	An advance against your unpaid invoices to business customers.	Mainly from your customers' payments.	Discount or interest charges, plus fees.	Cash tied up in invoices.

A general summary only: exact terms depend on the lender and the agreement.

Is a business line of credit secured or unsecured?

It can be either. Some facilities are secured by property or business assets, and others are unsecured. With an unsecured facility, lenders commonly ask a director or owner to act as personal guarantor, which means that person can be asked to repay the debt if the business can't. If property secures the facility, that property is at risk if the business can't repay. If you're signing as a guarantor, consider getting independent legal advice first.

What does a line of credit cost, and what should I check?

Costs usually include interest on the amount drawn and fees, which can include set-up fees and fees on the limit itself. Before you sign, check:

the total cost, including fees you pay even when you don't use the facility;
when the lender reviews the facility, and whether it can reduce or cancel the limit or ask for repayment;
whether you need to bring the balance down at set times;
what security or personal guarantees are required;
what happens if you go over the limit or miss a repayment.

How interest and fees are treated for tax depends on your business, so ask your accountant.

Pros and cons

Possible advantages

You can draw funds when you need them and repay when cash comes in.
Interest is generally charged only on what you use.
The facility can be used again while it's open.

Possible drawbacks

Fees can apply even when you don't draw on the facility.
The lender may review, reduce or cancel the limit.
A balance that stays drawn can become long-term debt, which the facility isn't designed for.
Security or a personal guarantee may be required.

How do I apply for a business line of credit, step by step?

Work out what the facility is for and how your cash flow moves over time.
Talk to your accountant about how it fits your business and the tax side.
Tell your broker what you need, and compare facilities, fees, security and review terms across the panel.
Your broker prepares the application with the documents the lender asks for. The lender will assess your application against its criteria.
If it's approved, the directors and any guarantors sign the documents, and the facility is set up for you to draw on.

How can 360 Asset Finance help?

We're a broker working with a panel of specialist lenders. We can:

arrange a business line of credit through our lender panel, subject to the lender's criteria;
compare facilities across our panel, including fees, security and review terms;
tell you what the lender needs, commonly your ABN, ID for directors and guarantors, financial statements or BAS, and business bank statements;
work alongside your accountant on the tax side and how the facility fits your cash flow;
prepare the application, work with the lender and keep you updated through to settlement;
show you other options to compare, such as invoice finance or an unsecured business loan.

FAQs

How does a business line of credit work in Australia?

The lender sets a limit. You draw what you need, repay it and draw again while the facility is open, and interest is generally charged on the amount drawn.

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

An overdraft is a different product: a limit attached to a bank transaction account that lets the account go below zero. 360 Asset Finance doesn't arrange them. A line of credit is usually a separate facility that you draw on and repay as you need.

Do I pay interest on the whole limit?

Generally not. Interest is usually charged on what you've drawn. Some facilities charge a fee on the limit, so check the total cost.

Can I get an unsecured business line of credit?

Possibly. Some lenders offer unsecured facilities, often with a director's personal guarantee. 360 Asset Finance can tell you what's available on our panel, subject to the lender's assessment.

Can I use a line of credit to buy equipment?

Possibly, depending on the lender, but revolving facilities are generally designed for short-term needs. Equipment finance is another option, where the equipment usually acts as security, and your broker can explain the differences.

Is 360 Asset Finance a lender?

No. 360 Asset Finance is a broker that compares options from a panel of lenders. The lender you choose provides the finance and decides whether to approve it.

Need flexible working capital?
Tell 360 Asset Finance what the funds are for and how your cash flow moves, and we'll help you compare options from our lender panel.
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Keep reading:Invoice (debtor) finance: turning unpaid invoices into working capital · Types of business finance: equipment, vehicles, property-secured, commercial property and software · Types of unsecured business loans, and finance for higher-risk industries · Secured vs unsecured business loans · Asset and equipment finance

Sources and further reading:business.gov.au: Apply for a business loan · business.gov.au: Choose your funding · business.gov.au: Improve your cash flow

General information only. It doesn't take into account your objectives, financial situation or needs, and it isn't credit, tax or legal advice. Finance is provided by the lender you choose and is subject to its lending criteria; fees and charges apply. 360 Asset Finance is a trading name of Kuone Consulting Pty Ltd (ABN 75 647 329 002), Australian Credit Licence 566705.

On this page

How does a business line of credit work?What do businesses use a line of credit for?How does a line of credit compare with an unsecured business loan or invoice finance?Is a business line of credit secured or unsecured?What does a line of credit cost, and what should I check?Pros and cons How do I apply for a business line of credit, step by step?How can 360 Asset Finance help?FAQs Next steps

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