Banking
Line of Credit (Working Capital)
Quick definition
Revolving credit facility lets a startup borrow up to a limit, repay, and re-borrow, used for short-term working capital needs.
A line of credit gives access to revolving capital: borrow up to the limit, pay it back, borrow again. Pricing: interest only on drawn amount, usually prime + 1-4%. Often secured by accounts receivable or inventory. Useful for managing seasonal cash flow or bridging AR collection delays. Distinct from a term loan (lump-sum drawn upfront, paid over time). Available from traditional banks and fintech lenders (Pipe, Capchase, Stripe Capital).
Frequently asked questions
- What is Line of Credit (Working Capital)?
- A line of credit gives access to revolving capital: borrow up to the limit, pay it back, borrow again. Pricing: interest only on drawn amount, usually prime + 1-4%. Often secured by accounts receivable or inventory. Useful for managing seasonal cash flow or bridging AR collection delays. Distinct from a term loan (lump-sum drawn upfront, paid over time). Available from traditional banks and fintech lenders (Pipe, Capchase, Stripe Capital).
- Why is Line of Credit (Working Capital) important for startups?
- Line of Credit (Working Capital) is a banking concept that matters for startup founders because it shows up in fundraising readiness, financial decision-making, and operational discipline at the stage where mistakes are expensive to undo. Founders who understand it are better prepared for diligence, board meetings, and investor conversations.
- What category does Line of Credit (Working Capital) belong to?
- Line of Credit (Working Capital) is a Banking term in the StartupCFO finance glossary, alongside other banking concepts that founders, CFOs, and accountants use in startup operations and reporting.
- Where can I learn more about Line of Credit (Working Capital)?
- Beyond this definition, see the related banking terms below, or explore StartupCFO's insights and tools that put Line of Credit (Working Capital) in context. For specific situations, talk to a fractional CFO who can walk through your numbers.
Sorting out your finance stack?
We work alongside the banks and card programs startups actually use, and reconcile all of it into one ledger.
No spam, ever. If the download doesn't start, email us.
Or talk it through:
