Credit Lines

Recognition

Won new work, or the cash gap just won't sit still

Payroll and suppliers don't wait for customers to pay. A contract's been won but there's no invoice to raise yet. The overdraft got reduced at the last review. These are different triggers, but they land on the same facility.

Why it happens

Not every gap is invoice-shaped

Invoice finance advances against something that already exists: an invoice. A lot of real cash gaps happen before that point, or aren't tied to a specific invoice at all. They're a general, recurring need for flexible headroom. Trying to force that into invoice finance, or into a fixed-term loan sized for one specific cost, usually means borrowing the wrong shape of money.

Where this fits

Where the diagnosis usually lands on a credit line

If you started at facility mismatch and the cash is trapped before mobilisation or invoicing, or the constraint is an existing debenture rather than the amount available, a credit line is usually the resolution the diagnosis points to. The same applies from supporting growth where the core facility ceiling itself, not a card or a specific entity, is what's become too small.

Specialist insight

Not the same thing as a term loan

A term loan is sized once, for one purpose, and repaid on a fixed schedule whether you're using the money that month or not. A credit line is sized for a range. You only pay interest on what you've actually drawn. Seasonal stock builds, a slow quarter, the working-capital gap on a large contract: if your cash need moves around across the year, a credit line is usually built for that shape. Forcing a term loan to fit tends to mean borrowing more than you need for longer than you need it.

For how this works in particular sectors, see paid media agencies, MSPs and tech integrators and care homes.

Why not just use invoice finance instead?

Because invoice finance needs an invoice to advance against, and a credit line doesn't. That's the whole distinction, but it matters more than it sounds. Winning new work, covering a mobilisation period before you've delivered anything to bill for, buying stock ahead of a season: none of that has a customer invoice behind it yet. Invoice finance can't advance against work that hasn't been invoiced. A credit line can, because it isn't tied to a specific receivable at all: it's tied to the business generally. Businesses that already have invoice finance often still need a credit line alongside it, for exactly the gap invoice finance structurally can't reach.

Decision helper

What a lender actually looks at

• Trading history and consistency of cash flow, not just profitability.
• What security already exists on the business, and where a new facility would sit behind it.
• How the limit would actually get used: genuine working capital, not a substitute for equity.

Alternatives and limitations

An established business with a genuinely one-off, known-in-advance cost is usually better served by a straightforward term loan, which tends to be simpler and cheaper for that specific shape of need. And if you're currently relying on a bank overdraft as your main buffer, it's worth reading why that's become a less reliable plan than it used to be: see Overdraft. To test your own numbers first, try our finance calculators and checkers.

Not sure this is the right facility?

Start from the mismatch, not the product

If the business is viable and the shortfall keeps recurring, the useful question is which stage of the cash cycle the money is trapped at, because that decides the facility. See facility mismatch.

Check it yourself first

Three questions decide most of whether a facility fits: is the gap recurring or one-off, are the invoices already raised or not yet, and is your security already pledged to an existing lender? Answer them before you ask anyone for anything.

• Facility eligibility checker: a few quick questions, not a form, that point to the facilities your situation suggests. Nothing is saved or sent.
• Winning new work and funding the mobilisation
• Funding operations while customers pay