Business Line of Credit Explained: Flexible Funding for Bills, BAS, Stock & Seasonal Cashflow
Business Line of Credit Australia 2025 – Switchboard Finance
A Business Line of Credit (LOC) is one of the most flexible cashflow tools available to Australian SMEs. Instead of receiving one lump sum — like a Working Capital Loan — a LOC works like a reusable pool of funds that you can draw from any time you need it.
This makes it perfect for covering short-term pressure points like payroll, supplier bills, BAS cycles, equipment repairs or stock purchases before revenue arrives. If you’ve ever had a month where “everything was due at once,” a LOC solves that problem instantly.
This guide explains how LOC works, when it’s better than WCL, how it complements Invoice Finance, and how smart business owners use all three products together inside a predictable cashflow system.
What Is a Business Line of Credit?
A Business Line of Credit is a revolving credit facility — meaning you can draw funds whenever needed, repay them, and draw again. It’s essentially a flexible cash buffer that sits in the background, ready for use.
SMEs commonly use LOC for:
- Running payroll during slow months
- Covering supplier and wholesale orders
- Managing BAS timing issues
- Short-term cash dips caused by late invoices
- Unexpected repairs or equipment breakdowns
This flexibility is why many owners choose LOC instead of repeatedly applying for small loans. It also pairs well with Equipment Finance and other cashflow tools commonly used by SMEs.
According to the ATO, SMEs regularly experience cashflow timing mismatches across BAS cycles — LOC gives owners breathing room during these periods without taking on long-term debt.
How Is a LOC Different From a Working Capital Loan?
Both WCL and LOC solve cashflow problems, but they do it differently:
- WCL: One lump-sum for a specific short-term need
- LOC: Reusable credit pool for ongoing cash gaps
For example, if BAS is due this month, WCL solves it. But if your business experiences seasonal or invoice-related dips every month, a LOC is the better long-term solution.
Most established SMEs use both tools strategically — which we break down inside the Cashflow System Framework.
Why Australian SMEs Love LOC as a Cashflow Tool
LOC shines because it offers:
- Reusability — draw, repay, draw again
- No need to reapply for each cashflow gap
- Only pay interest on funds used
- Flexibility for wages, stock, suppliers & BAS
- Fast access when unexpected costs hit
Industries that rely on timing-sensitive cashflow — cafés, tradies, medical clinics, transport — often pair LOC with insights from:
How Much Can You Access Through a LOC?
Limits depend on:
- ABN age
- Monthly revenue
- Bank statement behaviour
- ATO status
- Existing debt exposure
Most SMEs are offered between $10,000 and $250,000. If your business deals with large invoices, pairing LOC with Invoice Finance creates a powerful cashflow engine.
When LOC Is the Right Move
A Business Line of Credit is ideal if your business experiences:
- Regular monthly cash dips
- Inconsistent invoice payment cycles
- Large supplier orders upfront
- BAS pressure multiple times per year
- Seasonal or industry-based volatility
For tax cycle pressure, combine this article with strategies in BAS & ATO Low Doc Loans.
If you want the complete 3-product strategy, read the Cashflow System Guide.
