A line of credit is a revolving facility where the lender sanctions a credit limit, and the borrower draws funds as needed up to that limit. Unlike a term loan (where the full amount is disbursed at once), a line of credit offers flexibility to draw and repay multiple times.
Interest is charged only on the outstanding utilized amount, not the full sanctioned limit, making it cost-effective for businesses with fluctuating fund requirements. Lines of credit can be secured or unsecured, with tenures typically reviewed annually.
This facility is increasingly available from fintech lenders and NBFCs, offering quick digital processing and real-time access to funds for eligible businesses.
A line of credit provides flexible, on-demand access to funds at interest rates lower than short-term borrowing alternatives. It is ideal for managing cash flow variability.
Nihal Fintech helps businesses access line of credit facilities from banking and NBFC partners, providing flexible working capital support tailored to business cycles.
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