For when even the timing is unpredictable.

They overlap. A cash credit working-capital limit is sized to a measurable operating cycle and secured against stock and receivables. A line of credit is usually smaller, frequently unsecured, and priced on banking conduct rather than current assets — which makes it available to service businesses that hold no inventory.

Interest accrues only on the drawn balance. Some lenders charge a modest annual renewal or commitment fee on undrawn capacity, so it is not always literally free — but the carrying cost of an idle line is far below that of an equivalent term loan.

Once the limit is sanctioned, drawdowns are typically same-day or next-day through net banking. That speed is much of the value: the facility is set up before the need arrives rather than in response to it.

No. Limits are reviewed and renewed, usually annually, and a lender can reduce or withdraw one if conduct deteriorates or covenants are breached. Treat it as capacity, not as a committed reserve.

Several lenders allow a drawn amount to be carved out into a term loan with a fixed EMI. Useful if a temporary draw turns out to be permanent — it stops a revolving facility from quietly becoming permanent debt at revolving-facility pricing.