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Business Line of Credit (LOC)

A Business Line of Credit (LOC) is a revolving credit facility that lets Australian business owners withdraw, repay, and redraw funds as needed — similar to a business credit card, but usually with higher limits and better rates. It forms one of the three pillars of Switchboard’s Business Owners Finance Hub, alongside Working Capital Loans and Invoice Finance.

A LOC is designed for flexible, ongoing operational use, helping SMEs manage fluctuating expenses more efficiently than a lump-sum business loan.

Why a Business Line of Credit Matters

Many businesses — from cafés in the Café Hub to tradies in the Tradie Hub and transport operators in the Truckie Hub — experience regular cashflow swings.

A LOC allows owners to draw on funds instantly to manage:

  • supplier payments
  • bulk stock orders
  • urgent repairs
  • unexpected operating expenses
  • short-term working capital gaps before receiving revenue

Because you only pay interest on what you use, a LOC often costs less than a Business Loan or a daily/weekly Unsecured Loan.

How It Works

  • A credit limit is approved (commonly $20k–$500k).
  • You withdraw funds whenever you need them.
  • You repay when cashflow improves.
  • You redraw as often as required — no new applications.
  • Interest applies only to the balance used.

Approval is usually based on revenue patterns shown in business bank statements, and sometimes supported by PPSR security rather than collateral. Terms often rely on Fixed or Variable Rates, and the total cost is reflected in the Comparison Rate.

Common Use Cases

  • covering supplier invoices or stock purchases
  • seasonal demand fluctuations
  • equipment repairs and maintenance
  • ATO obligations
  • short-term payroll support
  • bridging cashflow while waiting for customer payments

LOCs work especially well when paired with Invoice Finance or a structured Business Cashflow System.

Related Switchboard Resources

Official business loan information: business.gov.au.

Does a LOC require collateral?
Not always — many modern LOCs use a general PPSR charge instead of asset security.
How is a LOC different from a Working Capital Loan?
A LOC is revolving (reuse funds anytime), while a Working Capital Loan is a fixed-term lump-sum loan.
Does interest apply on the full limit?
No — you only pay interest on what you draw, which is why LOCs are so cost-efficient.