Best Secured Business Lines of Credit in December 2024

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Written by
Jill A. Chafin
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Edited by
Janet Schaaf
Updated November 27, 2024
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A secured business line of credit lets you use your assets to access affordable business financing. Withdraw up to your credit limit as often as needed, only paying interest on what you use.

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SBA Express: Best secured business line of credit for SBA line of credit

$50,000 to $500,000

Up to prime + 3.00%

Up to 120 months

680 (recommended)

24 months (recommended)

Pros
  • Quicker funding times compared to other SBA loans
  • Capped interest rates
  • Long repayment terms
Cons
  • Only available to small businesses (as determined by the SBA)
  • Charges a guarantee fee
  • Business owner must have invested equity in the company

Why we picked it

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If you’re looking for a quick SBA loan, the SBA Express loan provides up to $500,000 in revolving funds to small businesses that fall within the SBA’s size standards. Like other SBA loan programs, the Small Business Administration (SBA) guarantees a portion of the funds to reduce lender risk, helping more businesses access the funds they need.While the SBA doesn’t set minimum credit scores, most SBA lenders require a score of 680 or higher. The processing time with an Express loan typically takes 36 hours, which is significantly faster than the turnaround time of five to 10 business days for SBA 7(a) loans.

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

Starting at $1,000

Variable

12 months (with annual review)

Not disclosed

Six months

Pros
  • Cash-secured line of credit can help establish a positive account history
  • Rate discounts for Bank of America Preferred Rewards members
  • Offers multiple business lending products
Cons
  • Doesn’t disclose interest rate ranges
  • Credit limit based on your security deposit
  • Annual fee of $150 (waived the first year)

Why we picked it

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New companies needing startup business financing can consider Bank of America’s cash-secured line of credit. With funds starting at $1,000 and only six months’ business history required, a cash-secured credit line can help you take your company to the next level while boosting your business credit profile.To get started, you must provide an upfront cash deposit — starting as low as $1,000. This deposit will be refunded after a successful one-year review. Once your business hits the two-year mark and earns at least $100,000 in annual revenue, you can graduate to Bank of America’s unsecured line of credit to access more funds.

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Wells Fargo: Best secured business line of credit for high-revenue companies

$100,000 to $1,000,000

Prime + 0.50% (subject to a 5.00% minimum)

12 months (with annual review)

Not disclosed

24 months

Pros
  • High funding amounts
  • Monthly interest-only payments
  • Competitive rates
Cons
  • High annual revenue requirement
  • Charges an origination fee on an annual basis
  • Doesn’t list credit score criteria

Why we picked it

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With the Wells Fargo Prime Line of Credit, high-earning companies can borrow up to $1,000,000 as often as needed with competitive prime-based rates — only paying interest on the amounts withdrawn. Funds can cover working capital expenses, inventory purchases or long-term projects.As a traditional bank with over 7,000 branches nationwide, Wells Fargo is an ideal one-stop shop for everything your business needs: business bank accounts, merchant services, credit cards, tailored support and more. However, businesses must pledge non-real estate assets and generate at least $2 million in annual sales to qualify for this secured line of credit.

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PNC: Best secured business line of credit for large amounts

$100,001 to $3,000,000

Variable, based on prime rate

Revolving

Not disclosed

36 months

Pros
  • High loan amounts
  • Monthly interest-only payments
  • Can be used as overdraft protection for your PNC business checking account
Cons
  • Minimum credit score or annual revenue requirements not disclosed
  • Long time-in-business requirement
  • Charges an annual fee

Why we picked it

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PNC offers a collateralized line of credit for well-established companies needing funds up to $3,000,000. Although PNC doesn’t disclose specific credit score requirements, it does share other eligibility requirements, such as having no history of late payments, foreclosures or tax liens within the past five years. You must provide non-real estate business assets to secure the debt.Interest-only payments are deducted monthly from your PNC business checking account. However, it’s best to make principal payments to avoid additional interest charges. PNC also charges an annual fee of 0.25%.

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What is a secured line of credit?

A secured business line of credit is a type of revolving small business financing that requires the borrower to pledge collateral to secure the debt.

Collateral is typically an asset like cash savings, equipment or real estate, which the lender can seize if you default. In addition to collateral, some lenders might also require a personal guarantee or a business lien.

Since providing collateral reduces lender risk, borrowers can often get lower rates and more flexible repayment terms with secured lines of credit.

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Unsecured vs. secured business line of credit

Both unsecured and secured business lines of credit work the same way: You can withdraw up to your set limit, using funds to cover working capital, inventory, payroll, seasonal dips in revenue and more. Once you repay the debt, you can borrow up to the limit again and again — only paying interest on the amounts you borrow.

The key difference between unsecured versus secured credit lines is that unsecured business loans aren’t backed by collateral. However, most unsecured loans typically require some form of protection to reduce lender risk, such as a personal guarantee or a blanket lien. Because of this, unsecured business lines tend to have smaller loan amounts, higher rates and shorter repayment terms.

Where to get a secured business line of credit

You can apply for a secured line of credit for business with traditional and private lenders. The best option for your business depends on factors like your credit profile, funding timelines, interest rates and how you plan to spend the proceeds.

Traditional banks and credit unions

There are many credit unions and banks that offer secured lines of credit. Offered by traditional lenders, these credit lines typically have the most competitive rates and flexible terms. Acceptable forms of collateral vary by institution but can include cash deposits or non-real estate business assets like inventory, accounts receivable and equipment.

To qualify, you will likely need multiple years in business with a solid cash flow and a good credit score. Note that processing times for bank loans tend to run slow. Wells Fargo’s secured line of credit, for instance, can take up to two weeks to process after submitting required documentation.

SBA lenders

The Small Business Administration (SBA) offers several SBA lines of credit with capped interest rates to help small businesses cover short-term cash flow needs. Borrowers can access up to $500,000 with an SBA Express loan or up to $5 million with one of the four SBA CAPLine programs.

While the SBA guarantees a portion of the debt, you must apply directly through an SBA-approved lender. Keep in mind that most SBA loans have longer processing times than other types of business loans, sometimes taking from 30 to 90 days to disburse funds. SBA Express loans are the exception, with a turnaround time of only 36 hours.

Online lenders

Alternative lenders utilize the latest underwriting software to provide quick business loans to a range of business types — from startups to well-established companies. Compared to traditional bank and SBA loans, online lenders typically have lower credit score and business history requirements.

While some online lenders offer secured credit lines, they usually focus on unsecured lines of credit with no collateral required. However, you might be able to access more competitive terms by providing collateral.

How to get a secured business line of credit

If you are ready to apply for a line of credit, here are six steps to help you get a secured business loan.

1. Determine your funding needs

Create a detailed business budget to estimate what credit limit your business might need. Remember, business lines of credit act like a credit card, allowing you to withdraw funds on an as-needed basis. Unlike business term loans, you will only pay interest on the amounts you withdraw.

  Use our business loan calculator to estimate how much you could borrow.

2. Evaluate your business qualifications

Each lender has its own set of business loan requirements, such as minimum credit score, annual revenue and collateral requirements. You can check your credit scores before applying to see where you stand.

If your options seem limited due to poor credit, try boosting your credit score or adding a creditworthy cosigner to increase the likelihood of approval.

3. Choose your collateral

Collateral requirements vary by lender but generally include fixed assets like equipment, real estate, invoices or financial assets like cash or certificates of deposit. If you are unable to meet the lender’s collateral requirements, try starting with an unsecured line of credit. Most lenders report on-time payments to the major credit bureaus, which will help build your credit profile over time.

4. Compare secured business lenders

Shopping around can help you find the best line of credit that fits your business needs. If a lender doesn’t disclose eligibility criteria and business line of credit rates online, contact them to get more information. You can also read small-business lender reviews before applying to ensure a lender is a good fit for your company.

5. Gather required documents

Lenders typically require certain legal and financial documents when reviewing your secured business credit line application. While the exact paperwork will vary, here’s a general idea of what you might need to provide:

6. Apply and review

You can complete most credit line applications online, but some traditional lenders might require an in-person appointment. In general, secured loans typically take longer to process and fund since the lender has to review your assets. With SBA loans, for example, it could take up to several months to receive your funds after approval.

Make sure to review your business loan agreement before signing to ensure you understand the rates, repayment term and additional fees.

How to compare secured business lines of credit

If you qualify for several credit line offers, it could be tough picking which one is the best option for your needs. Take a look at the following details to help narrow your options.

  Interest rate: Secured line of credit rates vary based on your credit profile and the type of lender, with traditional banks typically offering the most competitive rates. While variable rates might seem enticing in the moment, a fixed rate will offer more stability over the long term.

  Repayment term: Lines of credit could require daily, weekly or monthly payments. Some lenders, like Wells Fargo, require monthly interest-only payments. Make sure to crunch the numbers to ensure you can keep up with the repayment schedule.

  Time to fund: Online lenders typically fund businesses within one to three business days after approval, although this speed usually comes with higher rates and less flexible terms. If you can wait up to two weeks, you will likely receive a more competitive offer with a traditional bank.

  Additional fees: Watch out for extra costs associated with business lines of credit, such as origination, maintenance, draw and late fees, as well as business loan prepayment penalties. If possible, opt for a lender with minimal extra fees so you know what to expect.

  Loan purpose: Some lenders don’t work with certain industries or may restrict how you can spend the funds. For example, you can’t use Bluevine’s line of credit to fund an auto dealership or for political campaigns. Make sure to check that your potential lender is a good fit for your industry type.

Pros and cons of secured business lines of credit

ProsCons

 More lenient qualifications: Collateral can reduce lender risk, helping strengthen your loan application.

 More favorable rates and terms: Knowing that collateral can help repay the debt, lenders are typically able to provide lower interest rates and longer terms.

 Greater flexibility: A line of credit allows you to withdraw funds as needed, using the funds to cover a range of small business expenses.

 Assets at risk: If you can’t pay your loan, the lender could seize whatever assets you pledged as collateral.

 Slower time to funding: Lenders typically need extra time to appraise your collateral, which can significantly lengthen the funding timeline.

 Additional fees: Some lenders charge maintenance and draw fees, as well as annual origination fees.

Alternatives to secured business lines of credit

There are many advantages to getting a secured business line of credit, such as competitive rates and flexible terms. However, if your business is unable to provide adequate collateral, here are some other funding options to explore.

Unsecured business loans

Physical or financial assets typically are not required to qualify for unsecured business loans. However, some business lenders might require a personal guarantee and/or business lien for unsecured business loans as an extra layer of protection.

You can also consider other types of business loans that have lenient collateral requirements. For example, equipment financing and commercial real estate loans typically don’t require collateral in advance since the property you want to purchase helps secure the debt.

Small business grants

You can apply for a range of small business grants through local and nationwide government and nonprofit organizations and private corporations. While researching and applying for grants can take time and effort, it can be worth it to receive free money for your company.

Business credit cards

Another option for financing everyday expenses is a business credit card. Eligibility requirements tend to be less stringent than traditional business financing, plus you could earn business travel rewards as you spend.

Note that credit card interest rates typically run higher than traditional loans, which can add up if you don’t pay off your balance in full every month. You can, however, claim credit card interest as a qualified business tax deduction.

Crowdfunding

GoFundMe for business is a great way to raise money for specific business projects or goals. Start by creating a business profile and making a video of your funding goal.

Crowdfunding tends to work best for businesses with a robust online presence, especially if you can offer a specific product or service as a reward for donating. Crowdfunding platforms may take a small fee from donations you receive, but don’t typically charge upfront for the service.

How we chose the best secured business lines of credit

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

  • Minimum time in business: Options available to companies with a business history of six to 36 months.
  • Minimum credit score: Personal credit score requirements of 680 or lower.
  • Loan amounts: Funding amounts from $1,000 to $3,000,000 to help all sizes of business meet their immediate needs.
  • Rates and terms: We prioritize lenders with competitive rates, limited fees, flexible repayment terms, a range of loan amounts and APR discounts.
  • Repayment experience: We consider each lender’s reputation and overall business practices. We also favor lenders that report to all major credit bureaus, offer reliable customer service and provide customer perks, like free business coaching or rewards programs.

Frequently asked questions

Yes, securing a line of credit with collateral can improve your chances of approval and potentially get you a more competitive rate. Acceptable forms of collateral typically include fixed assets like equipment, inventory or real estate, as well as financial assets like cash and certificates of deposit.

Most lenders require a minimum FICO Score of 600 or higher when applying for a business line of credit. Providing collateral could help strengthen your application, even if you have a less-than-ideal credit score.

Alternatively, you can consider business lines of credit for bad credit, which can accept credit scores as low as 500. While these loans can help in a pinch, they typically come with higher rates and unfavorable terms.

Business owners might struggle to qualify for a business line of credit without steady revenue or acceptable collateral. However, there are other ways to get a startup business loan with no money, such as:

  • Equipment financing: Since the equipment acts as collateral to secure the loan, lenders like Taycor Financial are able to offer 100% equipment financing with no down payment or annual revenue required.
  • Microloans: Startup businesses and minority entrepreneurs can consider microloans, which have no annual revenue requirements to apply, as a small business funding solution.
  • Personal loans for business: Personal loans are usually easier to qualify for than business loans, although you still need a good credit score and a favorable debt-to-income (DTI) ratio. Also, you can’t claim interest charges on your business taxes when using a personal loan for business purposes.