Best Business Lines of Credit for New Businesses in July 2024

Business lines of credit are harder to find for new businesses, but it’s not impossible. Check out these top picks.

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LendingTree is compensated by companies on this site and this compensation may impact how and where offers appear on this site (such as the order). LendingTree does not include all lenders, savings products, or loan options available in the marketplace.
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By Tara Mastroeni | Edited by Abigail Bassett and Janet Schaaf | June 28, 2024

Business lines of credit at a glance

Fundbox: Best line of credit for owners with lower credit scores

$150,000

4.66%

3 or 6 months

600

6 months

Pros

  • Shortest time-in-business requirement
  • Low starting interest rate
  • Low minimum credit score requirement

Cons

  • Lower funding cap
  • Shorter loan terms
  • Only available to businesses based in the U.S.

Why we picked it

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At just six months, Fundbox has the shortest time-in-business requirement on this list, making it an excellent fit for startups. In addition, its low minimum credit score requirement makes it a good choice for business owners with less than stellar credit. Still, you may be more limited with Fundbox’s line of credit than with other options because its funding cap is just $150,000, which is much lower than some other competitors.

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OnDeck: Best business line of credit for same-day funding

$6,000 to $100,000

35.90%*

12, 18 or 24 months

625

12 months

*This rate reflects the estimated starting APR offered to at least 5% of OnDeck customers. It doesn’t reflect the minimum APR offered by the company.

Pros

  • Same-day funding available
  • Lower annual revenue requirement
  • Lower minimum credit score requirement

Cons

  • Low funding cap ($100,000)
  • Doesn’t disclose starting interest rate
  • Requires a business bank account

Why we picked it

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OnDeck’s ability to provide same-day funding is what really sets it apart from the competition. Its lenient qualifying requirements, including its $100,000 annual revenue requirement and minimum credit score requirement of 625, ensure that it’s an attainable option for newer businesses.

At the same time, you’ll be subject to a low funding cap once again. Plus, since OnDeck doesn’t publish its starting interest rates, it can be hard to estimate how much you’ll pay for the privilege of borrowing.

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American Express: Best business line of credit for for short-term funding

$2,000 to $250,000

3% for 6-month lines of credit
6% for 12-month lines of credit
9% for 18-month lines of credit

6, 12, 18 or 24 months

660

12 months

Pros

  • Fast application process
  • No prepayment penalty
  • Publishes full interest rate range

Cons

  • Must link a business bank account for approval
  • Requires personal guarantee
  • Higher minimum credit score requirement

Why we picked it

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American Express’ streamlined application process and transparency about its interest rates make it a strong pick for those looking for an affordable business line of credit. Plus, its lack of a prepayment penalty ensures that you’ll likely save money over some competitors if you decide to pay off your line of credit early.

Still, with a minimum credit score of 660, American Express is likely a better fit for those with excellent credit scores. In addition, be aware that the company’s personal guarantee requirement means you’ll be expected to repay the loan if your business is unable to foot the bill.

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Small Business Administration: Best government-backed business line of credit

Up to $5,000,000

Prime + 3.00%

Up to 120 months

680 (Recommended)

24 months (Recommended)

Pros

  • Can choose between a term loan and line of credit
  • Capped interest rates
  • Borrowers who may not be approved by more traditional financing sources may qualify

Cons

  • Could require a personal guarantee
  • Collateral may also be required
  • Funding times may be longer than you’d encounter with traditional lenders

Why we picked it

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The Small Business Administration’s Working CAPline is a form of an SBA 7(a) loan that is designed to help business owners who may not be able to qualify for more traditional financing by providing them with cyclical funding. Its capped interest rates and flexible qualifying standards make it a smart choice for newer businesses, but there are a few tradeoffs.

For one, SBA loans may come with personal guarantees or collateral requirements, and the application process and funding times may take longer than through other lenders.

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Bank of America: Best secured business line of credit

From $1,000

Not disclosed

12 months

Not disclosed

6 months

Pros

  • Low annual revenue requirement
  • Short time-in-business requirement
  • Likely easier to qualify for than other business lines of credit

Cons

  • Requires a cash deposit to open
  • Doesn’t disclose all qualifying requirements
  • Available funding may be limited

Why we picked it

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As a secured financial product, Bank of America’s Cash Secured Line of Credit works a little differently than other business lines of credit. This line of credit requires a minimum security deposit of $1,000 to open an account. Plus, your available funding will be equal to the size of the security deposit you can make.

The bank only requires six months in business and $50,000 in annual revenue, which is why it’s one of our best picks for newer businesses. Still, the funding you can access will be limited to what you can afford to put down, making it less flexible than some other options on this list.

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Lendio: Best business line of credit for low-revenue businesses

$1,000 to $250,000

8.49%

6 to 18 months

600

6 months

Pros

  • Low minimum credit score requirement
  • Low annual revenue requirement
  • High funding cap

Cons

  • Potentially exorbitant interest rates
  • Shorter repayment terms
  • Funding may take a few days

Why we picked it

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Requiring just six months in business and $50,000 in annual revenue, Lendio’s marketplace is a smart option for startups who need to find a line of credit, especially since the funding cap extends to $250,000. However, in exchange for the flexible qualifying standards, you will face relatively short repayment terms and potentially high interest rates. Available rates go as high as 60.00%.

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What is a business line of credit for new businesses?

A business line of credit is a flexible form of small business funding. Unlike a term loan, which disburses the money in one lump-sum payment, a business line of credit typically works more like a credit card.

You can use it to borrow money up to a certain limit. You’ll only pay interest on the amount that you’ve borrowed, and you can borrow against your limit again once you’ve paid down your balance.

Typically, most financial institutions require you to be in business for at least two years before extending you a line of credit. However, our picks for best business line of credit for new businesses have shorter time in business requirements.

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Types of business line of credit for new businesses

There are two types of business lines of credit that you may want to consider as a newer business owner.

  • Secured lines of credit: Secured lines of credit are backed by collateral. Since the lender has an asset that they can repossess if you default on the loan, these lines of credit are often easier to qualify for than their unsecured counterparts.
  • Unsecured lines of credit: In contrast, unsecured lines of credit are not backed by a form of collateral. Since they are often seen as riskier for the lender, you’ll often need a better credit score to qualify. You may also be subject to higher interest rates.

How to get a business line of credit for a new business

Here’s a closer look at how to get a business line of credit:

1. Determine why you’re borrowing and how much you’ll need

Determining why you need the loan and how much you’d like to borrow will be essential in helping you find the right lender. Some lenders have strict rules on how funding can be used, so be sure to check their restrictions.

If you’re unsure how much you’ll need to borrow, our business loan calculator can help you get an estimate.

2. Evaluate eligibility criteria

Checking your credit score can go a long way toward helping you figure out where to apply for a loan. If your score needs some work, consider working to build your credit score before applying or looking for lenders who accommodate lower scores.

Traditionally, online lenders offer more flexible qualifying requirements than brick-and-mortar financial institutions. However, in exchange you may end up with less flexible terms or a higher interest rate.

Similarly, secured lines of credit may also be easier to qualify for, but you’ll have to use an asset, such as inventory or a cash deposit, to back the loan.

3. Research appropriate lenders

Once you know what’s within your reach, the next step is to research lenders who may be a good match for your needs.

In particular, you’ll want to pay close attention to the term and whether it’s for a fixed amount of time, such as six or 12 months, or if it renews annually. You’ll also want to check in on the minimum payment amount that you’ll be required to make each month.

If you’re a new business, however, you’ll need to make sure you meet the lender’s eligibility guidelines to get a line of credit. It may also help to read some business lender reviews before moving forward with your application.

4. Gather your supporting documentation

Each lender’s required documents will vary. But, in general you should expect to provide a business plan, current financial statements, and business tax returns. In some cases, you may also need to connect to a business bank account.

5. Apply for the line of credit

These days, many business lines of credit applications can be completed online, but in some instances, you may need to visit a brick-and-mortar location in order to apply.

Decision time and funding timelines can also vary, but the lender will likely make these details clear so that you have a better idea of what to expect.

How to compare business lines of credit for new businesses

It’s a good idea to shop around when looking for a business line of credit for a new business. Doing so can help ensure that you find a financial product that you can afford, as well as one that suits your needs. Here’s what you should compare while shopping.

Rates: Business loan interest rates can vary by lender and are typically based largely on your creditworthiness. It’s worth noting that sometimes, lenders will charge a factor rate instead of simple interest.

Added fees: Be sure to ask each lender about the fees they charge. Business lines of credit often come with draw fees, annual fees or monthly maintenance fees, which can add up over time.

Repayment terms: Repayment can happen on a monthly or weekly basis for a business line of credit. Take the time to make sure you can afford to make the repayments on time to avoid default.

Credit limit: Credit limits can also vary by lender. Do your best to choose a lender who offers enough funding to meet your needs.

Funding time: Some lenders are able to deposit funds into your account the very same day your application is approved. Others may require a few days.

Pros and cons of business line of credit for new businesses

ProsCons

 Can withdraw money as needed

 Only pay interest on the amount that you borrow

 Typically has lower interest rates and higher borrowing limits than a credit card

 Not the best pick for financing large purchases or ongoing expenses

 May need to secure your financing with collateral

 Additional fees can elevate the cost of borrowing

Alternatives to business lines of credit for new businesses

If you decide that a business line of credit isn’t the right fit for your new business, don’t worry. There are other options, including:

  • Business credit cards: Business credit cards tend to have lower borrowing limits and higher interest rates than business lines of credit, but if you can afford to pay off your balance in full every month, you may be able to leverage rewards that you may not find with a line of credit.
  • Personal loans: If you have a decent personal credit score, you may be able to use a personal loan to fund your business’s needs. Just remember that you’ll be on the hook for repayment and that your personal financial profile will take a hit if you default.
  • Crowdfunding: Also known as peer-to-peer lending, crowdfunding involves receiving a personal loan from an individual investor rather than a financial institution. It can be easier to be approved for a loan with this model, but you’ll have to do your due diligence to ensure the lenders are trustworthy.

How we chose the best business line of credit for new businesses

We reviewed more than 15 lenders to determine the overall best six business lines of credit for new businesses. To make our list, lenders must meet the following criteria:

  • Minimum time in business of one year or less
  • Minimum credit score of 650 or lower
  • Rates and terms: We prioritize lenders with more competitive fixed rates, fewer fees and greater options for repayment terms, loan amounts and APR discounts.
  • Repayment experience: For starters, we consider each lender’s reputation and business practices. We also favor lenders that report to all major credit bureaus, offer reliable customer service and provide any unique perks to customers, like free wealth coaching.

Best business line of credit for new businesses summary

Frequently asked questions

Luckily, it is possible to get a business line of credit as a new business. All you need to do is research available lenders until you find one for which you meet or exceed the qualifying requirements. The list above can help you get started in your search.

Most banks require you to have at least a two-year business history before applying for a line of credit. However, some banks have more lenient qualifying requirements. For example, Fundbox only requires you to show six months in business.

The process for getting a business credit card as a startup often involves incorporating your business, obtaining an EIN number and applying for a card that suits your needs.