A business line of credit lets a company draw funds up to a set limit as needs arise and pay interest only on the drawn balance. Brookmont Funding, a small-business funding broker in Terre Haute, Indiana, explains draws, revolving and non-revolving lines and payroll use to Vigo County owners, then introduces requests to lending partners, which decide and set terms.
| Purpose | Costs that recur at unpredictable times |
|---|---|
| Funds arrive | Drawn in pieces, up to the agreed ceiling |
| Interest | Charged on the drawn balance |
| Commonly secured by | A business lien; sometimes unsecured with a guarantee |
| Vigo County context | 5,537 businesses had no payroll in 2024 (NES) |
A draw, step by step, on a Vigo County, IN business line
A draw is a withdrawal from the approved limit. Depending on the partner, you request one through an online account, a transfer to your checking account or a linked card. The moment you draw, that amount starts accruing interest and the available room shrinks by the same figure. Repay it and the room comes back.
Nothing is owed on the part of the limit you leave untouched, although some lines carry a maintenance or draw charge. Ask the partner for every cost that applies whether or not you draw.
Revolving lines versus one-pass lines
A revolving line refills as you repay: draw, repay, draw again, for as long as the draw period lasts. Most business lines work this way.
A non-revolving line lets you draw up to the limit over a period, but repayments do not restore the room. Once the total has been drawn, the line is used up. It suits a project paid in stages, such as a renovation billed in phases, more than recurring operating costs.
Interest on a business line, day by day
Most partners work out interest on each day's outstanding balance and bill it once a month. If you draw a sum on the tenth and repay it on the twentieth, you pay interest for roughly ten days on that amount. Many lines carry a variable rate tied to an index, so the cost of the same balance can change during the year. Read whether minimum payments cover interest only or interest plus part of the balance: interest-only minimums keep the balance from falling.
Draw period, renewal and repayment
Lines are rarely open forever. A partner typically sets a draw period, reviews the account at renewal and may reduce or close the line if the business has changed. Some lines convert any remaining balance into a repayment period at the end. Put the renewal date in the calendar and expect the partner to ask for fresh statements before it.
Running payroll through a line in Vigo County, Indiana
Yes. A line suits payroll gaps that come and go, because you draw only for the pay period that needs it and repay when receivables land. Where the gap is one-off and larger, a working capital loan may be simpler. Owners adding staff for the first time can read our first-employee article for the setup and cash-flow side.
Do not let a line become permanent payroll funding. If the balance never comes down, the business has a pricing or margin problem, and borrowing will not solve it.
Who uses lines in Vigo County, Indiana
Small firms dominate the county: 46.3 percent of Vigo County's 2,473 employer establishments had fewer than five employees in 2023 (U.S. Census Bureau, County Business Patterns 2023), and 5,537 businesses had no paid staff at all in 2024 (Nonemployer Statistics 2024). For a small operation, a line works as a buffer against uneven receipts: a contractor waiting on a customer's payment, a clinic waiting on claims, a shop restocking after a strong week. The county profile and funding by industry show which sectors are largest locally.
Secured and unsecured lines
A secured line is backed by collateral, often receivables, inventory or a general lien on business assets, and the partner may cap the limit at a share of that collateral's value. An unsecured line has no specific asset pledged, but partners commonly still ask the owners for a personal guarantee and may file a general lien. Either way, check what happens to the collateral if the line is reduced or closed at renewal, and whether the partner reviews your receivables or stock reports during the year.
Where a line stops making sense and a term loan starts
| Line of credit | Term loan | |
|---|---|---|
| Funds arrive | In draws, when needed | All at once |
| Interest on | Only the drawn balance | The full outstanding balance |
| Suits | Recurring, unpredictable costs | A single known project |
| Ends | At the end of the draw period or at renewal | When the last installment is paid |
For a single large project, compare term loans. The comparison page covers all six options, and how a request works explains what happens after you call.
By Brookmont Funding · Updated