Best Business Line of Credit in July 2024

Compare lenders to find flexible funds for short-term needs

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By Jill A. Chafin | Edited by Abigail Bassett and Janet Schaaf | June 28, 2024

Business line of credit lenders at a glance

American Express Business Line of Credit: Best business line of credit for quick approvals

Loan amounts$2,000 to $250,000
Starting interest rate3% to 9% (6 months)
6% to 18% (12 months)
9% to 27% (18 months)
Term length6, 12, 18 or 24 months
Minimum credit score660
Minimum time in business12 months

 Online approval takes only minutes

 Can receive funds within one to three business days

 Only need $36,000 annual revenue to qualify

 Personal guarantee required

 Confusing fee structure that varies based on term length

 Doesn’t fund all industries

Bluevine: Best business line of credit for high-revenue businesses

Loan amountsUp to $250,000
Starting interest rateNot disclosed
Term length6 or 12 months
Minimum credit score625
Minimum time in business24 months

 Flexible funding for well-established businesses

 Receive funds in as quickly as 24 hours

 No monthly maintenance fees

 Short repayment terms

 Lack of transparency around estimated interest rates

 Must have $40,000 in monthly revenue to qualify

OnDeck: Best business line of credit for unsecured line of credit

Loan amounts$6,000 to $100,000
Starting interest rateStarting at 35.90% APR
Term length12, 18 or 24 months
Minimum credit score625
Minimum time in business12 months

 Flexible funding without collateral

 Helps build business credit

 Same-day funding available

 Annual gross revenue of $100,000 or more to qualify

 Does not lend to certain industries, such as nonprofits

 Not available in North Dakota

Fundbox: Best business line of credit for bad credit

Loan amountsUp to $150,000
Starting interest rate4.66% for 12 weeks
8.99% for 24 weeks
Term length12 and 24 weeks
Minimum credit score600
Minimum time in business6 months

 Low credit score requirement

 Startup friendly — only need to be in business for six months to qualify

 No prepayment penalties

 Weekly repayments required over short terms

 Annual gross revenue of $100,000 or more to qualify

 Doesn’t fund all industries

Wells Fargo: Best business line of credit for startups

Loan amounts$5,000 to $50,000
Starting interest ratePrime + 4.50%
Term length60 months (no annual review)
Minimum credit score680
Minimum time in businessLess than 24 months

 No annual fee

 Automatic enrollment in a free rewards program

 Collateral isn’t required

 Must provide a personal guarantee

 Low funding amount compared to other lines of credit

 More established businesses can get a lower rate

Bank of America: Best business line of credit for secured line of credit

Loan amountsStarting at $1,000
Starting interest rateVariable
Term lengthAccount review at 12 months
Minimum credit score670 for unsecured products
(not disclosed for other products)
Minimum time in businessSix months

 Can help establish a positive account history

 Rate discounts for Bank of America Preferred Rewards members

 Offers multiple business lending products

 Lack of transparency about interest rates

 Credit limit based on your security deposit

 Annual fee of $150 (waived the first year)

Funding Circle: Best business line of credit for no extra fees

Loan amounts$5,000 to $250,000
Starting interest rateNot disclosed
Term lengthNot disclosed
Minimum credit score660
Minimum time in business24 months

 No application, prepayment or monthly maintenance fees

 A dedicated account manager to help guide you along the way

 Quick application process

 Lack of transparency around interest rates and terms

 Doesn’t fund all industry types

 Doesn’t report payments to all credit bureaus

What is a business line of credit?

A small business line of credit is a revolving 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 fixed repayment schedule, a business line of credit allows you to withdraw funds as needed. You can withdraw up to the credit limit, repay the borrowed amount and withdraw again.

Ultimately, a line of credit can help 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 ranging from 12 weeks to five years. Some lines of credit renew annually.

The business line of credit interest rate depends on the amount and terms you choose, your credit score and the lender’s current offerings. Typically, business line of credit rates can range between 3% to 39% or higher.

In addition, some lenders may charge the following fees:

  • Origination fee: $0 to 2% of the loan amount
  • Maintenance fee: Monthly or annual fee for keeping the line open. Some lenders waive this fee depending on the withdrawal amount or if your business is a startup.
  • Annual fee: $0 to $175
  • Draw fee: $0 to 2% of the withdrawn amount
  • Late fee: Up to 5% of any past-due amount

Business line of credit requirements

Lenders typically look at the following to determine your eligibility for a business line of credit:

  Credit score: Your personal FICO Score and business credit report both play a role in determining your creditworthiness. Many lenders require a minimum credit score of 600 (or more) when you apply for a small business line of credit, although having a higher score can help you secure a better interest rate.

  Time in business: Most lenders want a steady track record of at least one to two years, although certain lenders will work with those in operation for only six months.

  Annual revenue: You must show a steady income stream to qualify for small business financing. The amount varies greatly, with some lenders accepting annual revenue as low as $36,000 while others want to see $480,000.

Secured lines of credit vs. unsecured lines of credit

Business lines of credit can be secured or unsecured. A secured business loan requires collateral, such as real estate or equipment. If you fail to repay, 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.

  Thing to know
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 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 between business lines of credit versus business credit cards is that credit cards carry higher interest rates than lines of credit, typically ranging from 15.24% to 30.74%. Small business lines of credit can be used in more situations. For example, you might not be able use a credit card for leasing expenses, payroll services or certain vendor invoices, but a small business credit line can generally cover those expenses.

Business line of credit vs. business term loan

A business line of credit is similar to a short-term business loan or emergency business loan in that you can use it for various business expenses. However, a small business line of credit gives you access to immediate funding without the pressure to use the total amount.

If you need to tackle long-term expenses, a working capital loan could be a better fit. Business loans typically have fixed interest rates and business lines of credit have variable rates, which may be another deciding factor.

Business line of credit
Small business loan
Repayment scheduleRepayments begin after you make a withdrawal from your line of credit. Interest applies only 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 years 3 months to 25 years
Use of fundsShort-term or immediate expensesOne-time or long-term expenses
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Where to get a business line of credit

You have several options when applying for a business line of credit.

Banks or credit unions

You can access different business loans with a traditional bank or credit union. Typically, these lenders offer competitive rates and terms, but requirements may be fairly strict, often requiring a solid credit history and revenue, plus several years in business. You might also need to pay more fees and provide collateral to secure the funds.

Online lenders

Since alternative lenders incorporate a streamlined application process, they tend to be more lenient than traditional banks regarding qualifications and requirements and can provide access to funds faster. Certain alternative lenders even work with startups or offer bad credit business loans.

In addition, online lenders often offer other business loan products, such as inventory financing and franchise loans. But beware, these lenders typically have higher fees and lower credit limits than traditional bank loans.

U.S. Small Business Administration (SBA)

You can also consider 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.

How to get a business line of credit

Here’s how to get a business line of credit in six steps.

1. Decide why you need a line of credit — and how much

Determining why you need the credit line for your business is essential. Do you need flexible funding for inventory purchases or help to cover cash flow gaps, or is it more of a cushion for emergencies? Once you know the purpose of the financing, you can then decide how much you’ll need.

2. Evaluate your qualifications

Online lenders may be more lenient with business loan requirements than brick-and-mortar banks. However, you will likely pay higher fees and have less flexible terms with an online lender.

If you want a secured line of credit, evaluate the collateral you can provide, such as inventory or equipment. Alternatively, your lender may require a cash security deposit, which can be refunded depending on your account performance.

Check your credit scores in advance to know where you stand. Boosting your credit now can help you secure a better rate and save more money in the long run.

3. Research lenders

Once you know what’s out there and within your reach, it’s time to compare lenders to find the best business line of credit for your needs. Pay attention to whether the line is for a fixed term, such as 12 or 24 months, or if it renews annually.

If it offers an annual renewal, check whether there is a yearly fee, which can sometimes reach up to $175. It’s also a good idea to see if there is a required minimum payment each month.

Be sure to read business lender reviews before proceeding with the loan application.

4. Gather required documents

When applying for a business line of credit, each lender’s required documents will vary. In general, you can expect lenders to ask for a business plan, personal and business tax returns, financial statements and a balance sheet. Lenders may also have other requirements, such as a business bank account.

5. Apply and review

The application and approval timeline for a business line of credit can range from one day to several months. For example, Bluevine states that you can receive a decision in as little as five minutes, whereas Wells Fargo can take up to two weeks.

Most lenders will outline the timeline so you know when to expect funds. You may need to provide additional paperwork and documents after submitting the initial application, but your lender will guide you through the process.

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 3% to 39% or higher.

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.

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.

 Withdraw what you need and when you need it, helping limit over-borrowing

 You only pay interest on what you borrow, not on the total limit

 Usually has lower interest rates and higher borrowing limits than a credit card
 Not suitable for large purchases or long-term expenses

 May need to provide collateral

 Additional draw or maintenance fees can add up over time

How to compare business lines of credit

When picking the best business line of credit for your company, you’ll want to compare the following details:

Interest rate: Business lines of credit only charge interest on the amount withdrawn, not your total credit limit. Check if the interest rate is variable or fixed.

Repayment term: Many lines of credit require daily, weekly or monthly payments. Check your business budget to ensure you can afford the payments.

Time to funding: Ask potential lenders about their application process and time to funding. Many online lenders can make a credit decision within minutes, whereas traditional banks might take up to two weeks or longer.

Additional fees: Review your business loan agreement to see if your line of credit has maintenance and draw fees, as well as origination fees, late charges and business loan prepayment penalties.

Loan purpose: While a business line of credit is great for day-to-day expenses, you may be better off with a long-term business loan for more significant projects, or a commercial real estate loan for expansions.

Most importantly, make sure you can meet the lender’s specific requirements and that their products are available in your state and for your type of business.

How we chose the best business lines of credit

We reviewed the leading small business lenders to determine the overall best business lines of credit. To make our list, lenders must meet the following criteria:

  • Minimum time in business: Options available to all stages of business, from startups to those operating for 24 months or longer.
  • Minimum credit score: Personal credit score requirements between 600 and 680.
  • Rates and terms: We prioritize lenders with competitive rates, limited fees, flexible repayment terms, a range of credit amounts and APR discounts.
  • Repayment experience: We consider each lender’s reputation and overall business model. We also favor lenders that report to all major credit bureaus, offer reliable customer service and provide customer perks, like free business coaching.

Best business line of credit summary

Frequently asked questions

Most small business lenders generally want an excellent personal credit score of 740 or higher. The better your score, the more likely you’ll secure a low rate with flexible terms. However, many lenders are willing to work with those who have lower scores. For example, Fundbox’s minimum credit score requirement for their business line of credit is only 600.

Just be mindful that having a low or bad credit score will likely result in a higher interest rate. If you can postpone applying for funding, try boosting your credit score to be eligible for the most competitive offers.

Startups and recently established companies might struggle to qualify for a business line of credit since most lenders require a good to excellent credit score, one to two years in operation and a steady revenue.

Fortunately, some online lenders work with startups or those with limited or bad credit. You can also consider other types of funding, such as merchant cash advances and factoring companies, which typically have more lenient eligibility requirements. Be sure to research these lenders in advance and watch out for signs of predatory lending.

You may be eligible for a credit line increase once you’ve established a solid repayment history with your lender and your cash flow and income have improved. In addition to helping you access more funds, a credit limit increase could improve your credit score.

Contact your lender to see if you qualify for a higher credit limit. Alternatively, you can apply for a new business line of credit with another lender and see if you gain approval for a higher amount.

Getting a business line of credit for new businesses can be challenging since most lenders want to see your business in operation for a year or more. However, lenders such as Fundbox might approve a line of credit to new businesses that have been up and running for only six months. And Wells Fargo offers a business line of credit for businesses who have been operating for under two years. Check with each lender to see if they offer a startup business line of credit.

Typically, you should be in business for at least 12 months before applying for a small business line of credit. However, online lenders tend to be more lenient than traditional banks, with some willing to work with newer businesses.

Keep in mind that a business line of credit isn’t your only option for accessing capital. You can also consider the following methods to launch or grow your business: