Quick answer

Reuse a small-business line of credit for short, recurring cash needs and timing gaps. Refill (pay down then re-borrow) when it improves borrowing costs, lowers credit utilization, or preserves a dedicated emergency reserve.

When to reuse your line of credit

  • Predictable working-capital gaps: payroll cycles, seasonal inventory purchases, or short customer payment lags. Using the line keeps operations running without tapping long-term cash.
  • Short timelines (30–90 days): when you expect revenue soon and only need a short bridge.
  • If the line carries a draw fee but a low interest rate on outstanding balances, reuse can be cheaper than taking a new term loan.

When to refill (pay down and draw again)

  • To lower interest expense: if you can pay down high-cost balances and later re-borrow at a lower rate or on better terms.
  • To reduce credit utilization: paying down improves your utilization ratio and may help future borrowing and business credit scores (see CFPB guidance on credit basics).
  • To preserve a separate emergency cushion: keep a small cash reserve while using the line for planned growth projects.

Quick decision checklist (use before you draw)

  1. Purpose: short-term operating gap or long-term investment? Use line for the former; consider a term loan for the latter. (See our guide on when to choose a line vs a term loan: Small Business Line of Credit: Draws, Renewals and Fees)
  2. Timeline: can you realistically repay within the draw period or upcoming revenue cycle?
  3. Cost: compare APR, draw/renewal fees, and unused-line fees. (Reference: Line of Credit for Small Business: Structure and Costs)
  4. Credit impact: will borrowing push utilization high or trigger covenants?
  5. Alternatives: do you have cash reserves, invoice financing, or an SBA option that’s cheaper? (SBA provides small-business borrowing resources.)

Short examples from practice

  • Bakery: reused its line for a two-week ingredient buy ahead of holidays and repaid from holiday sales. This avoided a longer-term loan.
  • Manufacturing client: paid the line to lower utilization and took a short-term term loan to fund a plant upgrade, preserving the line for working capital.

Common mistakes to avoid

  • Treating the line like free cash. Repeated, long-term reliance can mask structural profitability problems.
  • Ignoring fees and renewal terms. Some lines have annual renewal fees or review triggers that change terms.
  • Overusing against covenant limits. That can force lenders to restrict access or increase rates.

Practical tips to keep a line ready and affordable

  1. Negotiate renewal terms and ask about automatic renewals; document fees and triggers. (See our article: Small Business Line of Credit: How to Keep It Ready and Affordable)
  2. Keep business financials current—lenders re-underwrite on renewals and after large draws.
  3. Track utilization monthly and target a utilization band (for many businesses 10–30% of limit) to preserve future borrowing power.
  4. If you expect a large planned expense, compare a term loan vs using the line for cost and credit-score effects.

When to consult a lender or advisor

  • Before large draws that could change covenants or require collateral.
  • If rate or fee changes are proposed at renewal.
  • When your cash patterns shift; a lender can suggest restructuring or a blended financing approach.

Authoritative sources

Internal resources

Professional disclaimer: This information is educational and not personalized financial advice. In my practice I review each business’s cash flows and lender terms before recommending reuse or refill strategies. Consult a qualified financial advisor or your lender for decisions specific to your business.