Line of Credit

What is a Line of Credit?

A line of credit is a flexible lending arrangement where a financial institution provides a borrower with access to a set amount of funds that can be drawn upon as needed. Unlike a traditional loan, a line of credit is revolving — as the borrower repays, the available credit replenishes, allowing them to borrow again without reapplying.

How Lines of Credit Work in B2B

In B2B commerce, a line of credit allows businesses to make purchases from participating merchants, pay over time, and then reuse their available credit for future orders. A business approved for a $25,000 line can use it across multiple transactions, merchants, and time periods — making it far more flexible than individual purchase financing.

Benefits of Revolving Credit

The revolving nature of a line of credit makes it ideal for businesses with ongoing procurement needs. Rather than applying for new financing with every purchase, buyers have a pre-approved credit facility they can tap into instantly. This speeds up the purchasing process and provides predictable access to capital.

Key Takeaways

• A line of credit provides revolving access to a set amount of funds
• Credit replenishes as the borrower repays
• It's ideal for businesses with ongoing or recurring purchasing needs
• Pre-approved credit enables instant purchasing without repeated applications