How a Business Line of Credit Can Keep Your Canadian Business Running

Running a small business is full of surprises…and not always the fun kind. Maybe your restaurant’s fridge decides to quit during the dinner rush. Or your construction project hits a delay, and you still have bills to pay. When cash flow gets tight, it’s stressful. You need a solution fast.

But traditional bank loans? They’re slow, complicated, and often come with requirements that small businesses can’t meet.

So, what do you do when you don’t qualify (or don’t have the time to apply and wait)? Luckily, there’s a solution that doesn’t involve long waits or piles of paperwork: a business line of credit. It can be used to cover a last-minute expense, restock your inventory, or bridge a cash flow gap. 

Does that sound a little too good to be true? Don’t worry! We’ll explain everything you need to know to make it work for your business.

What Is a Business Line of Credit?

A business line of credit is like a financial backup plan for your business. You get approved for a set amount of money, but you only use it when you need it.

You can borrow as much or as little as you need (up to your limit), and you only pay interest on what you actually use. Once you repay what you’ve borrowed, that money becomes available again. It’ll be ready for the next time you need it.

It’s a bit like a credit card. The difference is that it is designed to help you with your business needs (like covering payroll, repairing equipment, or buying extra inventory). 

A business line of credit gives you quick, flexible access to cash. Best of all, there’s no need to reapply every time you need funds. It’s there when you need it.

How Does a Business Line of Credit Work?

Still not sure how a business line of credit works or what the process looks like? Here’s exactly how:

1. Getting Approved and Setting a Limit

When you apply, the lender will look at your business’s revenue, credit history, and financial health to decide your credit limit.

Think of it as a cap on how much you can borrow at any time. Typically, it ranges from $5,000 to $250,000.

2. Drawing and Using Funds

Once you’re approved, you can borrow as much or as little as you need, whenever you need it, up to your limit.

As an example: If you have a $15,000 credit limit and withdraw $5,000 to cover payroll, you still have $10,000 available for other expenses.

3. Repaying and Reusing Funds

After you repay the $5,000 (plus interest), your full $15,000 becomes available again. This is what’s called revolving business credit: you can draw, repay, and reuse without reapplying.

A business line of credit gives you flexible access to funds, ensuring you’re prepared for unexpected costs, emergencies, or simply for peace of mind.

How You Can Benefit from A Business Line of Credit 

There are many ways a business can benefit from a business line of credit. Here are just four of the many advantages you get:

1. Better Cash Flow Management

Every business has its highs and lows, and cash flow can be unpredictable. Maybe your café needs to stock up on supplies before the holiday rush, or you’re a contractor waiting on a late payment to come through. A business line of credit helps you fill those gaps, so you can keep your operations running smoothly without any interruptions. This can save you from missing out on profits during busy times.

2. Save Money with Flexible Interest

With a line of credit, you only pay interest on what you actually borrow. For example, if you’re approved for $20,000 but only use $5,000 to cover a quick repair, you’ll only pay interest on that $5,000, not the entire limit.

This is a big advantage over traditional loans, where you’re often stuck paying interest on the full amount, even if you don’t use it all. With a business line of credit, you stay flexible and never pay more than necessary.

3. Get Funds Faster and Easier

Bank loans are known for being slow and complicated. They require piles of paperwork, perfect credit, and weeks (if not months) to get approved. A business line of credit, especially from alternative lenders like Merchant Growth, is much faster and simpler.

You can apply online, skip the mountains of forms, and get access to funds when you need them most. It’s a very simple process that saves you time and stress.

4. Flexible Financing for Any Business Need

A business line of credit is flexible. You can use it for whatever your business needs. Fix a broken fridge, restock inventory, or run a quick marketing campaign.

Unlike traditional loans, you’re not locked into using the money for one thing. Use it where it helps most. It’ll help you handle surprises or take advantage of opportunities when they arise without wasting time.

When to Use a Business Line of Credit

A business line of credit can help you cover:

  • Seasonal expenses: Stock up on inventory for busy times of the year.
  • Unexpected repairs: Fix that broken fridge, leaky roof, or out-of-service van.
  • Payroll gaps: Cover wages during slow months or unexpected delays in client payments.
  • Growth opportunities: Fund a quick marketing campaign or buy extra materials for a new contract.

That said, a line of credit isn’t ideal for long-term or big-ticket investments. For those, you’d want to consider other small business credit solutions.

Check out our term financing and e-commerce financing options to see what’s the best fit for your business.

How Does a Business Line of Credit Compare to Other Options?

What other options and alternative business loans are there and how do they stack up to a business line of credit?

  • Traditional Loans: Good for larger, long-term investments, but less flexible and slower to approve.
  • Credit Cards: Convenient but often come with higher interest rates and fees.
  • Merchant Cash Advances: Quick access to funds but less flexible in repayment terms.

A business line of credit sits right in the middle. It’s fast, flexible, and affordable. It works for day-to-day needs and smaller expenses that pop up unexpectedly. 

Common Misconceptions About Business Lines of Credit (Debunked)

If you’re like many other small business owners, some common myths might be holding you back. We’ve heard lots of the same concerns over and over again. Let’s clear those up:

“Isn’t a line of credit just like a credit card?”

Not quite. Both let you borrow as needed, but a business line of credit has some big advantages:

  • It comes with higher borrowing limits, often tens of thousands of dollars.
  • It’s designed specifically for business needs, like covering payroll or buying equipment, rather than everyday purchases.

“Will I need perfect credit to qualify?”

Not necessarily. While traditional banks may require excellent credit, alternative lenders like Merchant Growth have more flexible criteria. They consider your business’s overall health, such as revenue and cash flow, rather than just your credit score.

Why Should You Choose Merchant Growth for Your Business Line of Credit?

We get it: running a small business in Canada isn’t easy. Unexpected business expenses pop up, cash flow can get tight, and bank loans? They’re not always an option, especially if you don’t meet their strict criteria. 

That’s why we designed our business line of credit to be exactly what small businesses need: fast, flexible, and free of unnecessary hurdles.

Merchant Growth works differently:

  • Fast Approvals: No one has time to wait weeks for small business funding. Our online application process is quick and straightforward. You’ll get the funds in just 24 hours.
  • No Credit Score Worries: Your credit score won’t be impacted by applying. It’s risk-free. 
  • Flexible Repayments: Borrow what you need, when you need it, and only pay for what you use. It’s financing that works with your cash flow, not against it.

Made for Small Businesses: Are you running a restaurant, managing a construction project, or keeping up with retail demand? Whatever struggles you face, we understand them. Our financing solutions offer flexible short-term options with terms ranging from 6 to 18 months, tailored to your business needs

Not every business fits into the bank’s mold, and that’s okay. We’re here to provide financing that works for real-world businesses, all without the stress or delays. 

When your business thrives, so does your community. That’s something we’re proud to support.

Ready to Take Control of Your Cash Flow?

Merchant Growth’s business line of credit is designed to give Canadian small businesses the flexibility and support they need to handle unexpected expenses, seasonal slowdowns, or new opportunities for growth.

With our LOC, you can:

  • Access funds quickly with a straightforward online application process.
  • Get approved in as little as 24 hours. No waiting weeks like with traditional lenders.
  • Borrow only what you need, when you need it, and repay on flexible terms that align with your cash flow.

At Merchant Growth, we make emergency business funding easy, stress-free, and completely online. Apply today and receive your funds in as little as 24 hours. 

Frequently Asked Questions About Business Lines of Credit

How much can I borrow with a business line of credit?

It depends on the lender and your business’s financial health. Limits typically range from $5,000 to $250,000. Approval is usually based on factors like your revenue and creditworthiness.

How quickly can I access funds?

With alternative lenders like Merchant Growth, you can get approved and access funds in as little as 24 hours. This is great for when unexpected expenses or emergencies come up (you can’t plan for those). 

Do I need collateral to secure a line of credit?

At Merchant Growth, our financing is always collateral-free. You won’t need to provide assets like equipment or real estate as backing.

However, traditional bank lines of credit often require collateral, which could include business or personal assets. This can sometimes lead to higher credit limits or lower interest rates, but it also makes the process less accessible for many small businesses.

Summary: Your Business, Backed by a Flexible Solution

A business line of credit is a smart way to keep your business running smoothly when surprises happen. It’s fast, flexible, and is there when you need it. Unlike traditional bank loans, Merchant Growth’s line of credit gets you the funds you need quickly, without the stress of piles of paperwork or long waits.

Our line of credit requires no collateral. It’s a solution that is designed for Canadian small businesses that are handling unexpected repairs, covering payroll, or seizing a growth opportunity. Keep your business moving forward with financing that works for you. Apply today and take control of your cash flow with ease!

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