If you sell online, you already know cash flow isn’t a straight line. Payouts arrive every few days. Suppliers want deposits weeks before stock ships. Ad platforms bill as you spend. A viral post can empty your warehouse in a weekend, and then you need to restock now. A business line of credit is designed for exactly this kind of stop-start rhythm.
What is a business line of credit?
A line of credit is a pre-approved limit you can draw from whenever you need it. You repay what you’ve drawn — often as your payouts come in — and that amount becomes available to use again. Think of it as a buffer that sits in the background of your store until the moment you need it.
For online sellers, it tends to beat a lump-sum loan when:
- the cash gap is short and repeating (weekly ad spend, supplier deposits every quarter),
- you don’t know exactly how much you’ll need or when (restocks, surprise wholesale orders),
- you want to avoid borrowing the full amount on day one and paying for money you’re not using yet.
A lump-sum loan still wins for one big, planned purchase like a fit-out or equipment. We compare them in detail in our guide to when a line of credit beats a lump-sum loan.
Who qualifies?
Lines of credit for online sellers are unsecured, which means the lender is relying on your trading rather than an asset. As a general guide:
- Trading history: usually around six months or more of business bank statements.
- Turnover: the limit is based on what flows through your account, so steady deposits matter more than one spectacular month.
- Credit: weaker credit is considered case by case.
- Structure: sole traders, companies, partnerships and trusts can all apply.
- Purpose: business only — stock, marketing, freight, fulfilment, software and tax bills are all fine.
Decisions can sometimes come back the same day once a lender has your statements.
How online sellers actually use a line of credit
The supplier deposit. Your manufacturer wants 30% now and 70% before shipping. Draw for the deposit, draw again for the balance, repay as the stock sells.
The ad-spend bridge. Your campaigns are profitable but platforms bill faster than payouts land. Draw to keep campaigns running rather than switching off a winning ad set because the account is low on a Tuesday.
The restock sprint. A product takes off. Air-freighting a top-up order is expensive, but a sell-out is worse. Draw, restock, repay.
The tax lump. A strong quarter creates a larger GST return. Draw to pay on time, repay over the following weeks from normal trading. (More on this in GST and provisional tax funding.)
Good habits that keep your limit working for you
- Repay from payouts, not from other debt. A line of credit works best when normal trading clears it.
- Watch your “resting balance”. If the drawn amount never comes down, you might have a margin problem rather than a timing problem — check your unit economics.
- Keep everything in one business account. It makes your next limit review much easier.
- Don’t max it out for stock you’re unsure about. Keep headroom for the unexpected.
What if a line of credit isn’t available yet?
If your store is under about six months old, or your deposits are still small and irregular, lenders may not be able to size a limit yet. In that case the realistic options are:
- a property-secured business loan from $20,000 to $1m against NZ property you or a supporting party own, or
- building a few more months of clean statements and coming back. Our guide to building a credit profile for a new company covers what helps in the meantime.
Example scenario
Example scenario — generic and illustrative only. An Auckland streetwear label trading for 18 months drops new collections every six weeks. Each drop needs a production deposit and a burst of Instagram and TikTok spend, and payouts take a week or two to catch up. A line of credit sized to the label’s turnover lets the founders draw before each drop and repay as sales land, rather than taking a fresh loan every time.
Ready to see your options?
Enquire in about 60 seconds — it won’t affect your credit score. A lending specialist will look at how your store trades and talk through whether a line of credit, a term loan, or a mix of both suits you best.