A line of credit is drawn when a bill arrives and repaid as cash comes in, with interest on the drawn amount. The examples cover a repair, supply orders, a lab invoice, an associate’s salary and a four-month balance.
At a glance
- Interest
Charged on the drawn balance
- Repaid amounts
Available to draw again under the offer’s terms
- Fits
Supply orders, renewals, repair bills, short payroll gaps
Business lines of credit, drawn for a copier repair at a Collierville, TN accounting firm
A line of credit earns its keep on bills nobody planned for. When an office copier fails in the middle of a filing deadline, the repair is paid from the line and repaid when the next fees arrive.
Illustration only, invented figures: a Collierville, TN accounting firm with a $25,000 line draws $4,280 for a copier repair and repays it 30 days later. At a 13.85% annual rate the invented interest is $48.72, and the invented $20,720 left untouched costs nothing in interest.
An offer may also list a yearly charge for keeping the line open or a charge on each draw; both belong next to the rate in any comparison.
A commercial line of credit for a Collierville, TN physician office’s medical supply orders
A physician office buys medical supplies in repeat orders: gloves, gowns, test kits, paper and exam-table covers. A commercial line of credit lets each order be paid when it arrives and repaid from the visits it supports, without a new request every time.
A physician office with a handful of staff is far from unusual here: 40.5% of the 575 Shelby County, TN offices of physicians with paid staff (CBP 2023, NAICS 6211) had fewer than five employees.
A line fits a cost that has a clear source of repayment. A balance that never comes down is a sign the cost belongs on a term loan instead.
Interest only on the drawn balance: a dental lab invoice carried for 40 days in Collierville, TN
Interest on a line runs day by day on what is drawn. That makes a short draw inexpensive in dollars even at a rate that looks high next to a term loan.
Illustration only, invented figures: a Collierville, TN dental office draws $8,760 to pay a dental lab invoice and repays it 40 days later. At a 12.6% annual rate the invented interest is about $3.02 a day, or $120.96 for the 40 invented days.
Line draws come up in the blog as well: a 75-day draw for dental scalers set against an 18-month loan, contract gaps at a landscaping company and a repair bill during a soft-serve lease.
Hiring an associate on a line of credit: three months of salary drawn and paid back at a Shelby County, TN dental office
Adding an associate means paying a salary before the new production fully shows up in collections. A line can carry those first months and be paid down as the associate’s schedule fills.
| Month | Drawn | Paid down | Balance | Interest |
|---|---|---|---|---|
| Month 1 | $7,900 | - | $7,900 | $86.03 |
| Month 2 | $7,900 | - | $15,800 | $172.07 |
| Month 3 | $7,900 | - | $23,700 | $258.10 |
| Month 4 | - | $5,925 | $17,775 | $193.58 |
| Month 5 | - | $5,925 | $11,850 | $129.05 |
| Month 6 | - | $5,925 | $5,925 | $64.53 |
| Month 7 | - | $5,925 | $0 | $0.00 |
In this invented schedule the office draws $7,900 a month for three months, pays down $5,925 a month for four months, and pays $903.36 in invented interest over the seven months.
A revolving balance month by month: dental supply orders in Collierville, TN
A revolving balance goes up with each order and down with each payment. The amount available is the limit minus the balance, so paying down an order makes room for the next one.
| Month | Drawn | Paid down | Balance | Available | Interest |
|---|---|---|---|---|---|
| Month 1 | $6,400 | $2,000 | $4,400 | $25,600 | $46.65 |
| Month 2 | $3,850 | $4,100 | $4,150 | $25,850 | $44.00 |
| Month 3 | $5,200 | $3,000 | $6,350 | $23,650 | $67.33 |
| Month 4 | - | $6,350 | $0 | $30,000 | $0.00 |
Over these four invented months the office pays $157.98 of invented interest and owes nothing at the end, so the whole invented limit is open to draw again.
Getting a business line of credit for a Shelby County, TN law office: from the first call to any offer
A law office in Shelby County, TN can follow the same path as any business asking about a line:
- Call Baydale and describe what the line would pay for and roughly how large it needs to be.
- Fill in the online request form.
- The reviewing partner may want to see bank statements, the last tax return or the firm’s aged list of unpaid client bills.
- The partner may make an offer with a limit, a rate, any fees and a renewal date, or decline.
- Compare the offer’s draw period, renewal terms and fees before signing.
For 2023, County Business Patterns put Shelby County, TN legal services establishments with paid staff at 359 (NAICS 5411).
By Baydale Funding Group · Updated
