Business line of credit
Compare business lines of credit from our lender panel
A standing limit you draw on when cash is tight and repay when it is not, for businesses with uneven cash flow.
The basics
How does a business line of credit work?
A line of credit is a revolving facility. A lender approves a limit, you draw any amount up to it whenever you need it, and you pay interest on the drawn balance only. Repay what you have drawn and the funds become available again, without reapplying each time.
That is the whole point: unlike a term loan, which is a single event, a line of credit is a standing arrangement, ready when you need it, which suits businesses whose income arrives in lumps. The catch is that an undrawn limit is not free: most facilities charge a line, service or account-keeping fee for holding the money available, whether you draw or not. So the real cost is interest on what you draw plus a fee for the right to draw it, and any comparison that looks only at the rate is not a comparison.
How it works with a broker
You do not have to approach lenders one at a time and hope. You tell us your position once, we take it to the lenders on our panel whose appetite actually fits it, and you decide what to do with what comes back.
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You tell us once.
One conversation and one set of documents. Your trading history, how your cash flow moves through a year, what the limit is for, and whether you have security available.
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We compare the panel.
We match your file to the lenders likely to have appetite for it, then compare what they come back with on the things that matter: the limit, the interest rate, the line fee, how you draw, and what happens if you leave the limit sitting unused.
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You choose.
We put the options in front of you side by side and explain the trade-offs, including where a line of credit is the wrong answer. If you want to proceed, we handle the paperwork with the lender you picked.
Line of credit vs overdraft vs term loan
All three lend you money, but they behave differently. A line of credit is a standalone revolving limit you draw and repay repeatedly. An overdraft is a revolving limit attached to your bank transaction account. A term loan is a fixed lump sum on a fixed repayment schedule. The right one depends on whether your need repeats.
| Feature | Line of credit | Business overdraft | Term loan |
|---|---|---|---|
| What it is | A standalone revolving limit | A revolving limit attached to your transaction account | A fixed lump sum, paid out once |
| Interest is charged on | The drawn balance only | The overdrawn balance only | The full amount, from drawdown |
| Who offers it | Banks and non-bank lenders | Usually the bank that holds your transaction account | Banks and non-bank lenders |
| Do you have to move your banking? | No. It sits alongside your existing accounts | Usually yes, if you want it from a different bank | No |
| Reusable without reapplying? | Yes, up to your limit | Yes, up to your limit | No. Repaid is finished |
| Repayment shape | Flexible. Draw, repay, redraw | Flexible. Draw, repay, redraw | Fixed, scheduled repayments |
| Ongoing cost when you are not using it | Commonly a line or service fee | Commonly a facility or account fee | Generally none once the loan is repaid |
| Best suited to | A gap that recurs and is hard to predict | A small buffer sitting on your trading account | A known, one-off purchase |
Fees, limits, rates and structures vary by lender and by facility. The table describes how the products generally work, not the terms of any particular offer.
For the overdraft decision in depth, see business line of credit vs overdraft.
So which one is actually cheaper?
There is no single answer, and anyone who gives you one without looking at your numbers is guessing. But the mechanics point somewhere useful.
If you need a fixed sum for a one-off purchase, a term loan usually prices better. You are paying a revolving facility for flexibility you would not use. The line fee runs whether you draw or not, and you would draw once. That is the wrong shape for the job, and we will tell you so rather than arrange it.
If the gap recurs and you cannot predict it, the revolving facility usually wins, even though it looks dearer on the rate. A term loan large enough to cover your worst month has you paying interest on the whole amount for the whole term. A line of credit has you paying interest only for the weeks you are actually short. Compared over a year, the shape of your drawing matters more than the headline rate.
Against an overdraft, the difference is competition, not mechanics. The two products behave almost identically. The practical difference is that an overdraft generally comes from the bank that already holds your transaction account, so you take the number that bank gives you. A line of credit is a standalone facility, so you can compare lenders on it without moving your banking. That is the argument for looking beyond your own bank, and it is the whole reason this page exists.
Whether that comparison lands in your favour depends on your file. Worth checking: compare a line of credit against your current overdraft.
Market context
What are business line of credit rates in Australia?
Lenders compared by Money.com.au as at 5 August 2026 advertised line of credit rates from 11.70% to 24.95% p.a., with limits from $2,000 to $2 million. Where you would sit in that range depends on security, trading history and revenue consistency, and the limit and rate on any facility are the lender's decision.
The rate is only half the cost on this product. Providers compared by Finder (as at 22 July 2026) listed establishment fees commonly between 0.5% and 3% of the facility, and most facilities also charge an ongoing line or service fee that runs whether you draw or not. A sharp rate with a heavy line fee can cost more across a year than the reverse, so compare the total annual cost at your realistic drawn balance. That is the calculation we run with you.
Third-party market observations at the dates shown, not our rates and not an offer. Actual rates, amounts, advance levels and costs depend on the lender's or provider's assessment of your individual business, and we do not set lender or provider pricing. 121 Brokers is a broker, not a lender.
What lenders typically look for
There is no single answer, because there is no single lender. Every lender on our panel sets its own credit criteria and applies them to your file. What follows is the shape of what is usually assessed for a revolving facility, so you know what to have ready. It is not a checklist you can pass.
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An active ABN*
Some lenders also want GST registration, depending on the facility.
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A trading history*
Most lenders want your business to have been trading for a minimum period before they will offer a revolving limit. That minimum differs by lender.
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Revenue that moves through the business account*
For a line of credit, lenders look at the consistency of your turnover, not just the total. The facility is repaid from trading, so they want to see trading.
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Recent business bank statements*
Usually supplied directly or through a read-only data feed. This is the single document that does the most work in an application.
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A director guarantee*
Standard on most facilities, secured or unsecured. It means you are personally standing behind the limit.
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Security, if you want a larger limit*
Property or other assets. Not every line of credit needs it, and a secured facility takes longer to arrange because it involves a valuation.
Who it suits
A line of credit earns its fee when your income arrives in lumps
The businesses this product fits best have one thing in common: the money goes out before it comes in, and the gap repeats. Seasonal retail buying stock months ahead of the trade. Hospitality carrying payroll through a quiet fortnight. Agriculture spending a whole season before a single invoice is raised. Project-based trades funding materials and labour on a job that pays on completion.
Read more
What that looks like across a year is a cycle, not a loan. A seasonal retailer might draw progressively from late winter to fund stock, sit at the top of the limit through the build-up, then repay the balance down across the trading peak and sit at zero drawn for months. Same limit, four very different balances, and interest charged only for the months the balance was there.
That is also the answer to the obvious objection: why pay a line fee for a limit you are not using? Because the limit has to already exist on the day you need it. A facility arranged while you are trading well is a different conversation with a lender than one you go looking for in the middle of a bad month. The fee is the price of the limit being there in advance. Whether it is worth paying depends on how often you would actually draw, which is arithmetic worth doing before you arrange anything.
If your gap is not seasonal but sits in your debtors ledger, a line of credit is probably not the sharpest tool. When the money is already earned and you are just waiting on 30 or 60 day terms, invoice finance scales with the ledger itself. If most of your income arrives through card settlements, a merchant cash advance is the product usually offered to you, though it is generally the dearest option on this page and worth comparing carefully before you take it.
Industries
Industries we help fund
Whatever you do, the finance that fits depends on how your business actually trades. These are some of the industries we arrange funding for, each with its own guide.
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Agriculture & farming
Machinery, utes, inputs bought a season ahead, and repayments that can follow the harvest.
Agriculture finance -
Hospitality & cafés
Fit-outs, commercial kitchen gear, stock before the rush, and the quiet months in between.
Hospitality finance -
Retail & e-commerce
Buying stock before the season sells, fit-outs, and bridging supplier terms against your sales.
Retail finance -
Trades & construction
Tools, vehicles, materials up front, and bridging the gap between doing the work and being paid.
Trades & construction finance -
Health & allied health
Practice fit-outs, clinical equipment, hiring, and opening a second set of rooms.
Health finance -
Professional services
Hiring ahead of billings, office and technology, and bridging project-based invoicing.
Professional services finance -
Transport & logistics
Trucks and trailers, running costs, and carrying the gap between delivery and payment.
Transport & logistics finance
Customer stories
What business owners say about 121 Brokers
Testimonials reflect individual customers' experiences. Outcomes vary and depend on the lender and your circumstances.
121 Brokers Pty Ltd (ABN 37 674 323 712) is a finance broker, not a lender. We arrange finance through third-party lenders. Approval, interest rates, fees, timing and the funds themselves are set and provided by the lender, not by 121 Brokers.
FAQs
Line of credit questions, answered straight
Do I pay interest on the full limit or only what I draw?
Only on what you draw. An undrawn limit accrues no interest. Most facilities do charge a line, service or account-keeping fee for holding the limit available to you, so the true cost is interest on the drawn balance plus that fee. We compare both across the panel before you choose.
Line of credit vs business overdraft: what's the difference?
They behave almost identically: both are revolving limits you draw and repay. The difference is where they sit. An overdraft attaches to your bank transaction account, so it generally comes from the bank you already use. A line of credit is a standalone facility, so you can compare lenders on it without moving your banking. Full comparison above.
Is a business line of credit secured or unsecured?
Both exist. An unsecured line needs no asset pledged, but the limits are generally smaller and the pricing higher, because the lender is carrying more risk. A secured line, usually against property, generally unlocks a larger limit and sharper pricing. A director guarantee is standard either way.
The other difference is process: a secured facility involves a valuation and more paperwork, so it takes us longer to arrange. Which path suits you depends on whether you have equity available and how soon you need the limit in place. We will show you both rather than push you down one.
Line of credit vs term loan: which suits my business?
It depends on whether the need repeats. A term loan is a fixed lump sum for a known, one-off purchase, and for that job it usually prices better. A line of credit is for a gap that comes back and cannot be predicted, where a term loan would have you paying interest on the whole amount all year, including the months you did not need it.
Compare business loan types, or see the full comparison above.
Can a start-up get a business line of credit?
Usually not straight away. Most lenders want to see a trading history before they will offer a revolving limit, because the facility is repaid out of trading and there is nothing to assess without it. Minimums differ by lender. A brand-new business with no turnover is a hard fit for this product specifically.
That is not the end of the conversation. Businesses trading for a while but not long enough for a bank are often exactly who the non-bank lenders on our panel are set up for. If you are genuinely at day one, security changes what is possible, and other products may fit better than this one.
What fees apply to a line of credit?
Expect three kinds. An establishment or application fee to set the facility up. An ongoing line, service or account-keeping fee for holding the limit available, charged whether you draw or not. And interest on your drawn balance. Some facilities also charge drawdown fees or early-termination fees. All of it varies by lender.
The ongoing fee is the one businesses miss, because it runs when nothing is happening. That is not an argument against the product. It is an argument for sizing the limit to what you would realistically draw, rather than to the biggest number a lender will offer you.
A buffer works best when it is arranged before you need it.
The best time to set up a line of credit is a month you are trading well, not the month you are short. One conversation shows you what the panel would do with your file, and you decide whether any of it is worth taking.