What is a business line of credit?
A business line of credit (sometimes called a funding line or credit line) is an approved limit of funds a lender makes available to your business. Rather than receiving the full amount as a lump sum, you draw down only what you need, when you need it, and interest is charged only on the funds actually drawn — not on the full approved limit.
As you repay what you've drawn, the available balance replenishes, so the same facility can be used again and again over its term rather than being a one-off advance.
Typical limits and terms
Facility sizes for non-bank business lines of credit in New Zealand commonly range from a few thousand dollars up to $500,000, with terms often set for a period of around two years and renewed where the facility has been used responsibly.
- Typical range: $2,000 – $500,000
- Cost: interest on drawn funds, sometimes plus a small ongoing service fee on the available limit
- Term: commonly around 2 years, renewable
- Access: often via an online platform or linked card for day-to-day drawdowns
Line of credit vs business loan: which fits your situation?
A line of credit suits ongoing, variable cash flow needs — smoothing out payroll, seasonal stock buys, or unexpected costs. A fixed-term business loan suits a specific, one-off purchase where you know the amount and want a defined repayment end date.
- Choose a line of credit if: your funding need recurs or varies month to month
- Choose a fixed-term loan if: you need a known lump sum for a specific purpose