Compare finance types
Invoice finance vs Line of credit: which is right for your business?
The main difference between a invoice finance and a business line of credit is how they are secured and repaid: a invoice finance suits b2b businesses with reliable customers on long payment terms, while a business line of credit suits seasonal or project-based businesses managing cash-flow timing.
Invoice finance vs Line of credit at a glance
| Invoice finance | Business line of credit | |
|---|---|---|
| What it is | Invoice finance is funding advanced against eligible unpaid business invoices, typically 70–90% of the invoice value upfront with the balance (less fees) paid when your customer pays. It uses your receivables as security rather than property. | A business line of credit is an approved limit you can draw on, repay and redraw as needed, paying interest only on the amount used. It suits businesses whose funding needs rise and fall through the year. |
| Amount | $20,000 – $5,000,000 | $10,000 – $500,000 |
| Term | 1–12 months | 6–24 months |
| Indicative rate | 8% – 18% p.a. | 11.5% – 24% p.a. |
| Rate type | Variable | Variable |
| Security | Secured by receivables | Unsecured (guarantee may apply) |
| Repayments | Settled when the customer pays each invoice | Weekly or monthly minimums on the drawn balance |
| Typical speed | 24–48 hours per invoice once set up | 1–3 business days |
| Best for | B2B businesses with reliable customers on long payment terms | Seasonal or project-based businesses managing cash-flow timing |
| Consider the other if | Businesses that sell to consumers or are paid at the point of sale | A single large purchase you will repay over years |
| Tax | Fees are generally a deductible business expense. | Interest and line fees on business use are generally deductible. |
Rates shown are indicative ranges observed across our lender panel for the period stated. They are not an offer or quote. Your rate depends on your business, the lender, the amount, the term and the security offered. The lender makes the final credit decision.
When to choose a invoice finance
A invoice finance is usually the better fit for b2b businesses with reliable customers on long payment terms. Its main advantages are grows with your sales, no property security, can be confidential. Consider the alternative if businesses that sell to consumers or are paid at the point of sale.
When to choose a business line of credit
A business line of credit is usually the better fit for seasonal or project-based businesses managing cash-flow timing. Its main advantages are pay interest only on what you draw, redraw without reapplying, buffer against slow-paying customers. Consider the alternative if a single large purchase you will repay over years.
Invoice finance
Invoice finance is funding advanced against eligible unpaid business invoices, typically 70–90% of the invoice value upfront with the balance (less fees) paid when your customer pays. It uses your receivables as security rather than property.
Business line of credit
A business line of credit is an approved limit you can draw on, repay and redraw as needed, paying interest only on the amount used. It suits businesses whose funding needs rise and fall through the year.