Line of credit

For the gap between buying the animal and getting paid for the box.

A business line of credit is a revolving limit you can draw against whenever you need it, repay, and draw against again. You pay interest only on what is currently drawn. In a business where inventory is bought weeks before the invoice is paid, a line is usually a better instrument than a loan, because your need is not a single event — it is a cycle that repeats.

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Amount: $25,000 – $1,500,000
Term: 12 months, revolving and renewable
Time to funding: 2 – 7 business days to open; same or next day per draw thereafter
Typical rate: 8% – 28% APR on drawn balances
Collateral: General business lien and personal guarantee; larger lines may be secured by receivables or inventory

Sec. 01 — What it is

In plain language.

You are approved for a maximum. You draw what you need, when you need it, and the money hits your account within a day or two. Interest accrues only on the outstanding balance, not on the limit.

As you repay principal, that amount becomes available again. A $250,000 line used properly might carry a balance of $40,000 in February and $210,000 in November without a single new application.

Most lines are revolving for twelve months and renewed annually on updated financials. Some convert a drawn balance to a term payout at the end of the draw period, which is worth knowing before you sign.

Sec. 02 — What it costs

The price, and how repayment actually works.

A line you never draw on costs almost nothing. That is the argument for putting one in place before you need it rather than during the week you do.

Typical rate

8% – 28% APR on drawn balances

Interest-only monthly on the drawn balance is common; some lines require weekly principal and interest on each draw.
Twelve-month revolving terms, renewed annually.
Expect either a draw fee of roughly 1% to 3% per draw, or an unused-line fee of a few tenths of a percent. Rarely both — check which structure you are being offered.

Sec. 03 — Who it fits

Where this product does its best work.

These are the situations we actually see, in this industry, rather than a generic list of use cases.

Covering the 30 to 60 day gap between invoicing a foodservice distributor and getting paid.
Buying cattle, hogs or a container of frozen product when the price is right rather than when cash allows.
Seasonal inventory builds — grilling season, the holiday prime rib run, Ramadan and the Eid volume for halal retailers.
Payroll cover through a slow stretch, which for a deer-processing operation can be a real four-month problem.
Absorbing a USDA hold or a recall-related delay without missing supplier terms.

Sec. 04 — When this is the wrong product

Three situations where you should not take this.

A broker who never tells you no is selling, not underwriting. If any of these describe you, say so on the first call and we will point you somewhere else — including somewhere we make less money.

You are buying a ten-year asset

A blast chiller lasts fifteen years. A line of credit renews in twelve months. Funding long-lived equipment off a revolving line means your financing can be pulled, repriced or non-renewed while the asset still has a decade of life. Match the term of the money to the life of the thing it buys — that is equipment financing or a term loan, not this.

You will draw it to the limit and never pay it down

A line that sits permanently maxed is not a line, it is an expensive term loan with annual renewal risk attached. It is also the single clearest signal to a renewing underwriter that the business is not generating enough cash. If your honest forecast never shows the balance going back to zero, the problem is not the product — take a term loan and fix the margin.

You sell retail for cash and card only

A pure retail counter with no wholesale accounts collects at the register the same day it sells. There is no receivables gap to bridge, so the classic argument for a line does not apply. A seasonal inventory build might still justify one, but if a broker is pitching you a line and you have no receivables, ask them to explain what gap it is closing.

Sec. 05 — Worked example

Smoothing a 45-day receivable cycle at a seafood wholesaler

A Gulf Coast seafood wholesaler sells to three regional restaurant groups and two independent grocery chains, all on net 45. Product is bought off the boat for cash or near-cash terms. Every dollar of growth made the cash gap wider, and a strong year was actively painful.

Outcome

The wholesaler stopped turning down volume it could not cash-flow and took on a fourth restaurant group inside two quarters. The line has been renewed twice. The owner draws in the week product lands and pays down as remittances clear, and the balance has touched zero in each of the last three Februaries — which is exactly what a healthy line looks like.

Illustrative example. Figures are not an offer of credit.

Monthly revenue: $1.1M
Average receivables outstanding: $640,000
Supplier terms: Cash to net 7
Line limit approved: $500,000
Rate: 11.5% APR on drawn balance
Typical balance carried: $180,000 – $410,000
Annual interest cost at typical usage: ~$34,000
Time to open: 5 business days

Sec. 06 — What you will need

Documents for this product.

Gathering these before you apply is the single biggest thing you can do to shorten the timeline.

Six to twelve months of business bank statements
Most recent business tax return
Year-to-date profit and loss and balance sheet
Accounts receivable ageing, if you invoice wholesale accounts
A debt schedule

Sec. 07 — Questions

About line of credit.

How is this different from invoice factoring?

A line of credit is debt secured against your business generally, and your customers never know it exists. Factoring is the sale of a specific invoice, and depending on the structure your customer may be notified and may remit to the factor. Factoring also underwrites primarily to your customer’s credit, which helps if your own file is thin.

Does an unused line cost me anything?

Often a small unused-line fee, typically a few tenths of a percent annually. Some lines charge nothing until you draw and instead take a per-draw fee. Both structures are reasonable; what is not reasonable is paying both, so read for it.

Will my limit grow?

Generally yes, at renewal, if you have used the line and repaid it on schedule and revenue has grown. Drawing and repaying cleanly is the fastest way to a larger limit. A line that has never been touched sometimes renews at the same number because there is no repayment history to reward.

Can I use a line for livestock purchases?

Yes, and it is one of the better uses. But if livestock is the primary and recurring use of funds, a dedicated livestock line will usually price better and size larger, because it is underwritten against the animals rather than against the business generally.

Sec. 08 — Related

Other products worth comparing.

Working capital

Fast money for a short problem. Expensive, and we will say so out loud.

Invoice factoring

Sell the receivable today instead of waiting 45 days for the distributor to pay.

Livestock financing

Buy the animals, carry them through feeding, and repay when they sell.

Sec. 09 — Get started

See whether line of credit fits.

Two minutes, no hard credit pull, and a straight answer about whether this is the right product for your situation.

Important

Massive Meat Capital is a commercial finance brokerage, not a lender or a bank. Funding is provided by third-party lending partners. Rates, terms, and approval are determined by the funding partner and are subject to underwriting. Figures shown are illustrative and are not an offer of credit. Products are available to business entities only.

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