PROFITTHEORY

Business lines of credit

Business lines of credit: flexible working capital

A line of credit lets you draw funds as needed up to a limit and pay interest only on what you use. It suits uneven cash flow — seasonal inventory, slow receivables, payroll timing — rather than long-term purchases.

Talk with a financing specialist See what slow collections cost

Estimates only. Results vary. No guarantee of approval, rates or savings.

Profit Theory is not a lender. Providers make all funding decisions; approval is never guaranteed.

How lines work

Lines are usually reviewed and renewed annually. Some are secured by receivables or inventory; many carry variable rates. Some lenders require the balance to be paid to zero for a period each year.

Use it for the right things

Use a line for short-term timing gaps you can repay from normal collections. Financing equipment or an acquisition on a line can leave you short when you need it most.

Run the numbers

Blue = you enterGreen = calculatedGray = assumptionAmber/red = check this
$

Patient or customer charges billed per month.

$
days
%
%

E.g. your line-of-credit rate.

Days to collect today

46 days

Cash freed at 30 days

$61,644

Yearly carrying cost

$16,200

Expected uncollectible

$9,000

Days outstanding = A/R ÷ average daily charges. A simplified view — insurance timing, payment plans and write-off policy all affect real collections.

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Estimates only. Results vary. No guarantee of approval, rates or savings.

Estimates only. Results vary. No guarantee of approval, rates or savings.

Talk with a financing specialist

Common questions

Do I pay interest on the full limit?

Usually only on what you draw, though some lines carry an unused or annual fee.

What's a borrowing base?

A formula limiting draws to a percentage of eligible receivables or inventory.

Can a lender reduce my line?

Yes, at renewal or if covenants are missed. Read the agreement.