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By: Tanner Cupello
Last updated: 9/3/2024
A business line of credit is a flexible financing option you can draw from as needed. Interest is only charged on the amount of money you borrow. Compare the best business line of credit options below.
12+ years of serving small businesses.
75+ lenders in our network.
400,000+ businesses matched with business financing.
Lendio’s recommendations and reviews are selected by our team of lending experts who have worked directly with each funder in our network. While the lenders featured are all partners we work with, reviews are based on our team’s experience and a methodology with multiple criteria.
Interest rate
Starting at 5.9% for weekly repayment schedule, 7.8% for monthly repayment schedule
Funding amount
Up to $250,000
Term
6-12 months
Min. credit score
625
Time to funding
As fast as 24 hours after approval
The Bluevine Line of Credit offers up to $250,000 with access to your funds as fast as 24 hours after approval.
Our take
Pros and cons
Additional fees
APR range
Start at 29.9% APR
$6,000-$100,000
12, 18, or 24 months
OnDeck Capital is another option for a line of credit, offering a maximum loan amount of $100,000 with a 625 credit score requirement. They require at least one year in business and also offer short-term loans.
Daily interest rate minimum of 0.0658%
$10,000-$275,000
Up to 18 months
650
Same day
Idea Financial offers up to $275,000 with an 18-month term to business owners who have a minimum of two years in business under their belt and at least $15,000 in revenue each month.
Starting at 40% annually
$5,000-$100,000 (varies by state)
615
Headway Capital is an online small business lender that believes the success of the small business community is built on access to fast, flexible credit. They offer a True Line of Credit™️ that delivers fast funding and flexible weekly or monthly repayment options that charge daily simple interest. As part of the publicly traded company Enova International, Inc., they’ve served thousands of small businesses since 2014.
Starting at 4.66% (12 weeks) and 8.99% (24 weeks)
Up to $150,000
12-24 weeks
600
New businesses can get up to a $150,000 line of credit from Fundbox with only six months in business and a minimum credit score of 600.
A business line of credit is a flexible financing option for businesses. It allows business owners access to a predetermined amount of money, which they can draw from as needed. Unlike traditional loans where the borrower receives a lump sum upfront, with a line of credit, the borrower can use only the amount of money they need at any given time up to the credit limit.
And because a line of credit is revolving, you can use it as many times as you want. As soon as you repay what you’ve used, those funds become available to you again.
There are multiple benefits to a line of credit that make it ideal for businesses.
With a business line of credit, you only pay interest on the amount of funds you use, not the entire credit line. For example, if you’re approved for a $40,000 business line of credit and you use $20,000 for office upgrades, you’ll just pay interest on that $20,000. This could save you a bundle in interest. Pretty cool, huh?
Just like with a credit card, you can use a business credit line for just about anything. It’s good for businesses looking to expand and in need of a little cash to set up a new location, or for working capital. It can also be great to have on deck in the event you might need funds unexpectedly or to cover a dip in cash flow due to business seasonality.
$1,000-$250,000
1-2 days
6-18 months
8-60%
If your business doesn’t match some of the qualifiers below, receiving funding from our lending partners may be more challenging.
You’ll need a minimum credit score of 600 or higher to qualify for a business line of credit. However, some lenders may require a higher credit score depending on their lending criteria.
Many lenders will require your business to have a minimum annual revenue of $50,000. This shows that your business has a stable income and can handle the payments on the line of credit.
Most lenders will require your business to have been in operation for at least 6 months However, some may require a longer time in business depending on their lending criteria.
Take 15 minutes to find out what you qualify for from 75+ lenders.
Understand what you need the line of credit for, how much you need, and if you can afford to repay it. Having a clear picture of your cash flow needs is the first step.
Before you apply, make sure you know your credit score. Lenders will look at your credit score to determine your creditworthiness.
Gather your business financial statements, tax returns, bank statements, and legal documents. These are typically required by lenders during the application process.
Compare different lenders to see who offers the best terms for a business line of credit. Look at the interest rates, repayment terms, and any potential fees. There are several types of lenders you can consider:
Traditional Banks: These are the most common lenders. They offer competitive interest rates but might have stringent requirements such as good credit scores and prolonged business history.
Online Lenders: These lenders typically have a faster application process and may have less strict requirements. However, they might also charge higher interest rates.
SBA Lines of credit: The Small Business Administration offers lines of credit for small businesses through their partner lenders.
Once you’ve chosen a lender, you can apply for a line of credit. This usually involves filling out an application form and submitting your documents.
Once you receive approval for a line of credit and agree to the financier’s terms, the mechanics of a business line of credit are pretty easy to understand. You can use the funds from the line of credit for any business-related expenses—you can even withdraw them as cash for business purchases. Your account will accrue interest if you don’t repay the financier for any funds used within a statement period.
Generally, you don’t want to spend too close to your credit limit for too long—this situation sends a warning to your lender that your business might be struggling.
In some cases, a financier might require you to pay down your total balance and keep your balance at $0 for a while. This shows that your business can survive without using credit.
In other situations, especially in a bad economic environment, a financier might require you to pay back a line of credit all at once. Because of this, you shouldn’t make a line of credit the lifeblood of your company.
Interest rates for a business line of credit can range from 8% to 60%. If your credit score is higher, you can usually secure a rate on the lower end of this scale.
The way your interest rate is calculated will vary based on your credit line agreement. Some rates will be calculated daily, weekly, or monthly instead of annually. The rate will also go up or down depending on the term length.
It is common for lines of credit to have annual fees, so read your agreement carefully.
Generally, you don’t want your balance to be too near your credit limit for too long, especially if you work in a riskier industry like restaurants, construction, or seasonal retail.
Research is always your friend when it comes to small business loans. You can use a line of credit calculator to understand exactly what a line of credit could provide for your company.
Lines of credit are more similar to a business credit card than a business loan because you don’t receive a lump disbursement at once. Instead, you pay for business expenses using the line of credit and repay the financier for only the funds used.
If you pay using a line of credit, interest accrues on any balance that is not paid down by the end of each statement period. Like a credit card, as you pay down the balance, the amount of credit available to you increases.
Limits on a business line of credit are set by a lender. Lines of credit are typically renewed over time, assuming the borrower’s creditworthiness remains in good standing. Usually, once you agree to a line of credit, it will remain open until you opt to close it.
Lines of credit come in two main forms – secured and unsecured.
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To qualify for a business line of credit you will need to have a credit score of 600 or higher and have a proven track record of generating revenue. Newer businesses can look at line of credit options for startups.
You can obtain a business line of credit without needing collateral. This type of credit is called an unsecured line of credit, and it does not require you to put up any collateral. However, it can be more expensive due to higher interest rates. Lenders take on a greater risk when lending unsecured funds, which is why they charge higher rates of interest.
A small business loan is a lump sum of money that is given to the borrower upfront and repaid over time with interest. It is ideal for one-time investments or larger expenses. A line of credit, on the other hand, allows the borrower to access a predetermined amount of funds as needed and only pay interest on the amount used. It’s better suited for recurring or ongoing expenses. Learn more about business loans vs. lines of credit.
A line of credit and a credit card both offer access to funds as needed, but there are some key differences. A line of credit typically has higher limits, longer repayment terms, and may have lower interest rates compared to a credit card. It also requires an application process and may require collateral. On the other hand, a credit card is usually easier to obtain and can be used for smaller, everyday purchases.
Wondering how we chose the best? We used the following criteria to evaluate the lenders in our network.
*The information contained in this page is Lendio’s opinion based on Lendio’s research, methodology, evaluation, and other factors. The information provided is accurate at the time of the initial publishing of the page (July 29, 2024). While Lendio strives to maintain this information to ensure that it is up to date, this information may be different than what you see in other contexts, including when visiting the financial information, a different service provider, or a specific product’s site. All information provided in this page is presented to you without warranty. When evaluating offers, please review the financial institution’s terms and conditions, relevant policies, contractual agreements and other applicable information. Please note that the ranges provided here are not pre-qualified offers and may be greater or less than the ranges provided based on information contained in your business financing application. Lendio may receive compensation from the financial institutions evaluated on this page in the event that you receive business financing through that financial institution.