Oceangate Funding Group, a small-business funding broker in Ogden, Utah, explains business lines of credit: a limit drawn as needed, with interest on the outstanding balance and the ability to redraw after repaying. Lines suit recurring, uneven costs such as supplier invoices and payroll gaps. Lending partners review deposits, receivables and credit, then decide and set limit and terms.
| Built for | Recurring costs of uneven size and timing |
|---|---|
| Drawing | Take funds up to the limit as needed |
| Interest | On the drawn balance, not the full limit |
| Types | Revolving (redraw after repaying) or non-revolving |
| Partners usually review | Bank deposits, receivables, credit, existing debt |
How draws and repayment work
The partner approves a limit. You draw what a cost requires, and interest accrues on that drawn amount. As you repay, the available balance goes back up. Some lines require minimum monthly payments of interest only; others require part of the principal too. Many have a review date when the partner looks at the business again and decides whether to renew the line.
Two details matter more than the headline limit: fees charged whether or not you draw, and how often the line is reviewed. Ask about both before comparing offers.
Revolving or non-revolving
A revolving line can be drawn, repaid and drawn again for its life. A non-revolving line lets you draw up to the limit, but repaid amounts do not become available again; it behaves more like a term loan you take in pieces. Contractors who fund the same kind of job over and over usually want revolving. A single long project with staged costs may suit non-revolving.
Credit line versus a business credit card
Both let you borrow, repay and borrow again. The differences:
| Line of credit | Business credit card | |
|---|---|---|
| Typical use | Payroll, larger supplier invoices, materials | Smaller, frequent purchases |
| Access | Transfer to the business bank account | Card transactions, sometimes cash advances |
| Cost if carried | Interest on drawn balance plus any line fees | Card interest, usually charged on balances carried past the grace period |
| Underwriting | Business deposits, receivables, credit | Often more weight on owner credit |
A card paid off every month is a reasonable tool for small purchases. When a balance is carried for months, or the cost is payroll that a card cannot pay, a line is usually the better fit. The same logic applies to a business loan versus a credit card: fixed costs with a known end belong on a loan, not a revolving balance.
Covering payroll
Owners ask whether a business loan or line can cover payroll. A line is often the right shape, because the gap tends to repeat: crews paid weekly, customers paying monthly. The partner will want to see that the deposits to repay each draw arrive reliably. If payroll gaps exist because the business is losing money, a line adds cost without fixing the cause.
Weber County's employer base is small-firm heavy: 3,589 of its 6,389 employer establishments had fewer than five employees in 2023 (U.S. Census Bureau, County Business Patterns 2023). For a business that size, one late customer payment can affect a payroll, which is why lines are a common request. More local figures are on our Ogden, UT page.
What lending partners usually review
- Several months of business bank statements, to see the deposits that will repay draws.
- Receivables aging, if the line is meant to bridge customer payments.
- Business and owner credit, and any existing liens.
- Time in business and entity status.
A secured line may be backed by receivables or a general lien on business assets; an unsecured line still usually involves a personal guarantee. Each partner sets its own criteria, and none are promised by meeting a checklist.
Sizing a line
A useful way to size a request is to look back over a year of bank statements and find the largest gap between money out and money in, then the typical one. A line sized to the typical gap with room for the large one is easier to justify than a round number. Partners set the limit, and they usually tie it to deposits or receivables, so the history you bring is what supports the size.
Lines next to the other options
If the cost is a single project with a known price, a term loan is cleaner. If the gap is one-off, working capital financing may be enough. If the need is stock, inventory financing ties the funding to the goods. All six are compared in one table, sector notes are under financing by industry, and the process explains what we do with your request.
By Oceangate Funding Group · Updated