Best Business Line of Credit in 2022

By Carissa Chesanek | Edited by Kurt Adams and Pearly Huang

A business line of credit is a flexible form of revolving funding for short-term expenses. You can borrow up to a specific limit and borrow again once you repay the amount you owe. With a business line of credit, you only pay interest on the amount you owe. 

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Best business line of credit

If you’re interested in applying for a business line of credit, we’ve rounded up some of the top lenders to help get you started.

LenderBest forMaximum credit limitRepayment termStarting interest rate
Wells FargoTraditional bank experience$100,000Revolving, no annual reviewPrime + 1.75%
KabbageFast funding$250,0006, 12 or 18 months2-9% for 6-month loans, 4.5-18% for 12-month loans, and 6.75-27% for 18-month loans
OnDeckUnsecured line of credit$100,00012 months29.90% APR
FundboxShort term funding$150,00012 or 24 weeks4.66% for 12 weeks; 8.99% for 24 weeks
BluevineStartups$250,0006 or 12 months6.20%

Learn more about how we chose our picks.

Wells Fargo: Best for a traditional bank experience

Term lengthRevolving, no annual review
Term lengthRevolving, no annual review
Max. amount$100,000
Est. interest ratePrime + 1.75% to Prime +9.75%
Min. credit scoreNot disclosed
Min. time in business2 years

Pros

  No annual fee for the first year

  Enrolled automatically in free rewards program


Cons

  Two years in business to qualify

  Not transparent about terms or minimum credit score requirement

If you prefer a traditional brick-and-mortar bank experience, Wells Fargo offers business lines of credit up from $5,000 to $100,000. Interest rates start at the lender’s prime rate (which can fluctuate) + 1.75% up to prime + 9.75%. Applications can be completed online or in person and notification of approval can take up to 10 days.

Read our review


Kabbage: Best for fast funding

Term length6, 12 or 18 months
Term length6, 12 or 18 months
Max. amount$250,000
Est. APR2-9% for 6-month loans, 4.5-18% for 12-month loans, and 6.75-27% for 18-month loans
Min. credit score640
Min. time in business12 months

Pros

  Credit lines available up to $250,000

  Repayment terms of 6, 12 or 18 months


Cons

  Personal guarantee required.

  Confusing fee structure that varies based on term length

Kabbage offers business lines of credit up to $250,000 for term lengths from 6 to 18 months, though the lender states that eligibility varies based on creditworthiness and other criteria. Monthly fees for the credit line vary based on the term you select. As of October 2022, monthly fees for six-month terms are 2% to 9%, 12-month terms are 4.5% to 18% and 18-month terms are 6.75% to 27%.

We like Kabbage because the time to funding is relatively quick: you can receive the funds in one to three business days.

Read our review


OnDeck: Best for unsecured line of credit

Term length12 months
Term length12 months
Max. amount$100,000
Starting interest rate29.90% APR
Min. credit score625
Min. time in business12 months

Pros

  No prepayment penalties

  Receive funds instantly after making a withdrawal


Cons

  Business must make at least $100,000 in annual gross revenue to apply

  Does not lend to certain industries, such as nonprofits and select states: Nevada, North Dakota or South Dakota

OnDeck’s business line of credit is available from $6,000 to $100,000 with APR starting at 29.90%, though the average APR is 48.9%. OnDeck lines of credit are unsecured, meaning that you do not need to pledge collateral to back your loan. However, OnDeck loans require a personal guarantee and they do impose a blanket lien on business assets.

There is a 12-month repayment term and no prepayment penalties if you choose to pay off your line of credit early. You may be able to receive funds within the same business day if you submit your loan application before 10:30 a.m. ET. Otherwise, you can anticipate funds within two to three business days.

Read our review


Fundbox: Best for short term funding

Fundbox logo

Term length12 and 24 weeks
Term length12 and 24 weeks
Max. amount$150,000
Starting interest rate4.66% for 12 weeks
8.99% for 24 weeks
Min. credit score600
Min. time in business6 months

Pros

  No prepayment penalty

  Borrowers only need to be in business for six months


Cons

Short term length means limited time to repay

  Business must make $100,000 or more in annual revenue

If you’re looking for a line of credit for short term funding, Fundbox may be a good option for you. Fundbox offers business lines of credit up to $150,000 with terms between 12 and 24 weeks. Interest rates start at 4.66% for 12 weeks and 8.99% for 24 weeks. To be eligible, businesses need to be in operation for at least six months and have an annual revenue of $100,000 or greater. If approved, you can receive funds the next business day.

Read our review


BlueVine: Best for startups

Term length6 or 12 months
Term length6 or 12 months
Max. amount$250,000
Starting interest rate6.20%
Min. credit score625
Min. time in business6 months

Pros

  Credit lines available up to $250,000

   No monthly maintenance fees


Cons

  Must have a minimum credit score of 625

  Business needs to be in good standing

With only six months in business and $10,000 in monthly revenue to be eligible, BlueVine’s lines of credits could be a good option for startup businesses looking for funds.  BlueVine offers lines of credit up to $250,000 with interest rates starting at 6.20% for six months and terms between 6 and 12 months.

Read our review

How does a business line of credit work?

A business line of credit is a revolving, flexible form of small business funding with interest that is only paid on the amount borrowed. Whereas a term loan offers a lump sum of money upfront and needs to be paid back in installments, a business line of credit allows borrowers to withdraw funds they need during the draw period and borrow again once they repay the amount owed.

A business line of credit can help finance unexpected expenses that come up, such as when supplies need to be purchased, or with future funding that can include upcoming payroll invoices that need to be paid.

Business line of credit terms, rates and fees

When you borrow funds from a business line of credit you typically have a set length of time to repay what you owe. These are called repayment terms which can range from longer time periods of 12 or 24 months and up to five years, to shorter terms, like 12 to 24 weeks. Some lines of credit renew annually.

The interest rates for business lines of credit will likely vary with each lender but usually depend on the amount borrowed and the term length along with your credit score. Typically, these rates can range anywhere between 4% up to 60% APR but can also be higher.

In addition to interest, here are some common fees you can expect with a line of credit:

  • Origination fee: $0 to 0.5% of a line of credit that reaches over $250,000
  • Maintenance fee: Monthly or annual fee but can be waived depending on withdrawal amount and time of withdrawal and if your business is a startup
  • Annual fee: $0 to $175
  • Draw fee: 2% or less of the withdrawn amount
  • Late fee: 5% or less of any past-due amount

How to get a business line of credit

There are various places to get a line of credit, which can include online lenders, traditional banks and credit unions. Online lenders may be more lenient than traditional banks in terms of qualifications and requirements and can often provide access to funds faster. But beware these lenders can come with higher fees than those from traditional banks.

There is also an SBA line of credit through the SBA CAPLines program. An SBA revolving line of credit provides short-term financing that can reach up to $5 million with repayment terms of up to five years.

To receive a business line of credit, there are certain eligibility requirements that can differ between online and traditional banks. Here are the most common requirements:

  • Credit score: Lenders typically look at your personal and business credit score to determine approval.
  • Time in business: Companies usually need to be in business for at least six months with some lenders requiring two years.
  • Business plan: Lenders look at a business plan to learn about what your company offers, along with its operating costs and your plan to not only make a profit but how you intend to pay back any money that was borrowed.
  • Other documents: You may need to provide lenders with other documents, such as bank statements and accounts receivables, to show you are financially stable.

How much will a business line of credit cost?

A benefit of taking out a business line of credit is that you only pay for what you borrow — interest only applies to the amount you withdraw. Average APRs for business lines of credit can range from 8% to 80% or more.

For instance, let’s say you have a business line of credit totaling $50,000 and you withdraw $10,000. If you and the lender agreed on a 10% interest rate, then the interest would total $1,000 for the amount you withdrew. The amount you would be responsible for paying back would be $11,000, not $50,000. Once you have paid off the $11,000, you would have access to the full $50,000 again.

Secured lines of credit vs. unsecured lines of credit

Business lines of credit can be secured or unsecured. A secured line of credit is backed by collateral, such as real estate or equipment, while an unsecured business line of credit is not. Although, some lenders may put a lien on your business with an unsecured business line of credit or require you to sign a personal guarantee to secure repayment if you default. Newer companies may not qualify for an unsecured business loan since they do not yet have the financial history or business credit yet, so a secured line of credit might be a better option. Even though a secured line of credit uses collateral, it does have some advantages, including possible higher spending limits that can come with lower interest rates.

Business line of credit vs. business credit card

Similar to a business line of credit, a business credit card is also a revolving credit line that allows you to pay off what you owe. But credit cards are very different in that they can carry much higher APR at around 18% to 26.99%. A business line of credit is a flexible form of funding for various business expenses, but a business credit card cannot always be used for everything, such as any leasing expenses.

Should I get a business line of credit or a term loan?

A business line of credit may be a good idea if you need to cover short-term costs, such as inventory, but you’re unsure of the exact amount you need. Opening a business line of credit would also give you access to immediate funding in case of an emergency or unexpected expense.

However, a business line of credit wouldn’t be your best option for large purchases or long-term expenses; instead, a term loan would be the better choice for those costs. Business loans typically have fixed interest rates while business lines of credit often have variable rates, which may be another deciding factor.

Here’s a quick comparison of some key differences between a business line of credit and a business loan:

Business line of creditSmall business loan
Repayment scheduleRepayments would begin after you make a withdrawal from your line of credit. Interest would only apply to the amount you borrow.Repayments would start as soon as you receive your loan, or shortly after. Interest would apply to the entire loan amount.
Terms12 weeks to 24 months to repay each withdrawal3 months to up to 25 years
Use of fundsShort-term or immediate expensesOne-time or long-term expenses

Pros and cons of a business line of credit

To help determine whether a business line of credit is the right choice for you, here are some pros and cons to consider.

ProsCons
  Only pay for expenses you need so you aren’t over-borrowing  Not good for large purchases or long-term expenses
  Pay interest only on the amount you withdraw  May need to provide collateral 
  Can come with lower interest rates and higher borrowing limits than a credit card  May include additional fees

Methodology: How we chose our picks

To appear on our list of best business lines of credit, we selected lines of credit with a maximum credit line of $100,000 or higher and a minimum credit score of 600. We considered minimum time in business, time to funding, application eligibility, interest rates and overall loan cost in making our list.

Frequently asked questions

A line of credit allows a business to draw funds from a set amount of money. You could borrow as much as you need up to your credit limit and only pay interest on what you actually borrow. Revolving lines of credit allow you to replenish your full credit amount once you pay back your debt.

Yes, you may be eligible for a credit line increase once you’ve established a repayment history with your lender. In addition to your past payments, the increase may be based on your cash flow and income. Contact your lender to see if you’re eligible for a higher credit limit.

You may be eligible for a line of credit, even if you have bad credit. Typically, a business owner will need a minimum credit score of 600 or higher to be approved for a business line of credit. Keep in mind, that the higher the credit score, the better the interest rate. However, those with lower credit scores can still apply and be approved but will likely have higher interest rates.

Some lenders approve a line of credit to new businesses that have only been up and running for six months. It’s best to check with each lender to determine which are more apt to work with startups and which are interested in only working with established companies.

A business line of credit is a more flexible funding option with interest only applied to the amount you withdraw. On the other hand, a small business loan provides a lump sum (that can range from $5,000 to $500,000 or higher) with interest applied to the entire amount. Repayment terms for a business loan have a larger range that can be anywhere from three months and up to 25 years as opposed to a line of credit that can be up to 24 months. Business lines of credit are ideal for more immediate funding while business loans are better suited for more long-term expenses.

The application process for a business line of credit varies by the lender, but may be fast, simple, and often, completed all online. You can receive a quote within minutes and even find out if you’re approved that same day. Funds can usually be received within several business days after approval and can sometimes reach your account the same day.

Yes. A business line of credit can help you build business credit as long as you make your payments on time. Lenders usually report your on-time payments to the three credit bureaus which can help improve your overall score.