Best Business Line of Credit in 2023

By Jill A. Chafin and Carissa Chesanek | Edited by Kurt Adams and Pearly Huang

A business line of credit provides flexible financing for short-term expenses, like supplies or payroll. With a business line of credit, you only pay interest on the amount you owe.

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Best business lines of credit

Compare the top lenders to find a business line of credit that suits your specific needs.

How Does LendingTree Get Paid?

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.

How Does LendingTree Get Paid?

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.

LenderBest forMaximum credit limitRepayment termStarting interest rate
Wells FargoTraditional bank experience$150,000Revolving, no annual reviewPrime + 1.75%
Kabbage by American ExpressFast funding$250,0006, 12 or 18 months
  • 2%-9% (6 months)
  • 4.5%-18% (12 months)
  • 6.75%-27% (18 months)
OnDeckUnsecured line of credit$100,00012 months29.90% APR
FundboxShort-term funding$150,00012 or 24 weeks
  • 4.66% (12 weeks)
  • 8.99% (24 weeks)
BluevineStartups$250,0006 or 12 months6.20% simple interest for a 26-week repayment term

Learn more about how we chose our picks.

Wells Fargo: Best for a traditional bank experience



Read our review

Term lengthRevolving, no annual review
Max. amount$150,000
Est. interest ratePrime + 1.75% to Prime + 9.75%
Min. credit scoreNot disclosed
Min. time in business2 years

Kabbage by American Express: Best for fast funding

Read our review

Term length6, 12 or 18 months
Max. amount$250,000
Est. interest rate
  • 2%-9% for 6-month loans
  • 4.5%-18% for 12-month loans
  • 6.75%-27% for 18-month loans
Min. credit score640
Min. time in business12 months

OnDeck: Best for unsecured line of credit

Read our review

Term length12 months
Max. amount$100,000
Starting APR29.90% APR
Min. credit score625
Min. time in business12 months

Fundbox: Best for short-term funding

Fundbox logoRead our review

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

Bluevine: Best for startups

Read our review

Term length6 or 12 months
Max. amount$250,000
Est. interest rate6.20% simple interest for a 26-week repayment term
Min. credit score625
Min. time in business6 months

How does a business line of credit work?

A business line of credit is a revolving, flexible form of small business funding that only charges interest on the amount you use. Whereas a term loan offers a lump sum upfront with a repayment schedule, a business line of credit allows you to withdraw funds as needed. You can withdraw up to the credit limit and once you repay the amount you’ve borrowed, you can withdraw funds again.

Ultimately, a line of credit helps cover unexpected business expenses, such as inventory, payroll or seasonal fluctuations in revenue.

Business line of credit terms, rates and fees

The repayment period for a business line of credit varies by lender, with terms generally ranging from 12 weeks to five years. Some lines of credit renew annually.

The line of credit interest rates depend on the amount and terms you choose, your credit score and the lender’s current offerings. Typically, rates can range between 4% to 60% APR or higher.

Some lenders charge additional fees on top of interest:

  • Origination fee: $0 to 10% of the loan amount
  • Maintenance fee: Monthly or annual fee for keeping the line open. You may be able to get it waived depending on withdrawal amount, time of withdrawal or if your business is a startup.
  • Annual fee: $0 to $175
  • Draw fee: $0 to 2% of the withdrawn amount
  • Late fee: 5% or less of any past-due amount

Secured lines of credit vs. unsecured lines of credit

Business lines of credit can be secured or unsecured. A secured line of credit requires collateral, such as real estate or equipment. If you default, the lender could seize your assets.

Although an unsecured business line of credit doesn’t require collateral, some lenders may put a lien on your business assets or require you to sign a personal guarantee. In this case, you could lose certain assets if you default.

Newer companies may not qualify for an unsecured business line of credit since they need a solid financial history or business credit, making a secured line of credit a better option. A secured line of credit offers some advantages, such as possible higher spending limits and lower interest rates.

Business line of credit vs. business credit card

A business credit card is another form of revolving credit where you only pay for what you use. The advantages of a business credit card include a quick and easy application process and the ability to use it almost anywhere while earning rewards and bonuses.

The most significant difference is that credit cards carry higher interest rates than lines of credit — with rates around 12.99% to 28.49%. Additionally, there are certain limitations to credit card usage. For example, you can’t use a credit card for leasing expenses, payroll or certain vendor invoices, whereas a business line of credit can cover those expenses.

How to get a business line of credit

The eligibility requirements differ between online and traditional banks. Here are the most common conditions:

  • 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, although many lenders require two years.
  • Business plan: Lenders look at your business plan, operating costs and your plan to repay debt.
  • Other documents: You may need to provide lenders with other documents to show you’re financially stable. This could include bank statements and accounts receivables.

How much will a business line of credit cost?

A benefit of taking out a business line of credit is that interest only applies to the amount you withdraw. Business line of credit rates vary significantly from lender to lender but typically range from 4.36% to 44% or more.

Example

Samantha has a business line of credit totaling $50,000 with a 10% interest rate. If she withdraws $10,000, she will owe $1,000 in interest. The total amount Samantha needs to repay is $11,000, not $50,000. Once she repays the $11,000, she can access part or all of the $50,000 again.

Uses for a business line of credit vs. a term loan

A business line of credit can help cover short term or emergency expenses. Opening a business line of credit gives you access to immediate funding without the pressure to use the full amount.

However, a term loan or working capital loan is better for larger purchases or long-term expenses. Business loans typically have fixed interest rates and business lines of credit have variable rates, which may be another deciding factor.

Business line of creditSmall business loan
Repayment scheduleRepayments begin after you make a withdrawal from your line of credit. Interest only applies to the amount you borrow.Repayments start as soon as you receive your loan or shortly after. Interest applies to the entire loan amount.
Terms12 weeks to five years3 months to 25 years
Use of fundsShort-term or immediate expensesOne-time or long-term expenses

Pros and cons of a business line of credit

Even if you’re eligible for a business line of credit, it might not be the best financing for your business’s specific needs.

ProsCons
  Only pay for expenses you need so you aren’t over-borrowing  Not suitable 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

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

Some lenders, such as Bluevine, 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.

Approval for a business line of credit can range from one day to several months. The application process varies by lender and is usually done online. Some lenders make a decision within the same day, whereas others take a week or two. Most lenders will outline the timeline so you know when to expect funds.

You may be eligible for a credit line increase once you’ve established a repayment history with your lender and if your cash flow and income change. Not only will an increase help you access more funds, but it could also boost your credit score. Contact your lender to see if you’re eligible for a higher credit limit.

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