A business line of credit provides flexible financing for short-term needs, like managing cash flow, purchasing supplies or covering payroll. With a business line of credit, you only pay interest on the amount you owe.
Written by Jill A. Chafin | Edited by Kurt Adams and Janet Schaaf | July 31, 2023
| Lender | User ratings | Best for | Max loan amount | Min. credit score | Starting interest rate |
|---|---|---|---|---|---|
 |
User Ratings & Reviews
Ratings and reviews are from real consumers who have used the lending partner’s services. | Startups | $250,000 | 660 | 3% to 9% (6 months) 6% to 18% (12 months) 9% to 27% (18 months) |
 | User ratings coming soon | Fast funding | $250,000 | 625 | 6.20% simple interest for a 26-week repayment term |
 |
User Ratings & Reviews
Ratings and reviews are from real consumers who have used the lending partner’s services. | Unsecured line of credit | $100,000 | 625 | Starting at 29.9% APR |
 |
User Ratings & Reviews
Ratings and reviews are from real consumers who have used the lending partner’s services. | Bad credit | $150,000 | 600 | 4.66% (12 weeks) 8.99% (24 weeks) |
 | User ratings coming soon | Traditional bank | $150,000 | 680 | Prime + 1.75% |
Learn more about how we chose our picks.
| Term length | 6, 12 or 18 months |
| Max. amount | $250,000 |
| Est. interest rate | 3% to 9% (6 months) 6% to 18% (12 months) 9% to 27% (18 months) |
| Min. credit score | 660 |
| Min. time in business | 12 months |
| Min. annual revenue | $36,000 |
Personal guarantee required
Confusing fee structure that varies based on term length
An American Express Business Line of Credit is a great option for startup business loan since it only requires 12 months in business and only $36,000 in annual revenue to qualify. With up to $250,000 of funds, you can tackle your most immediate needs, helping your business grow and expand.If approved, you can receive funds within one to three business days. Monthly fees vary based on the term you select.
| Term length | 6 or 12 months |
| Max. amount | $250,000 |
| Est. interest rate | 6.20% simple interest for a 26-week repayment term |
| Min. credit score | 625 |
| Min. time in business | 24 months |
| Min. annual revenue | $480,000 |
Short repayment terms (6 or 12 months)
Interest rate is calculated for 26 weeks, so actual APR and borrowing costs may be higher
A Bluevine business line of credit is one of the quickest ways to access funds for your business. If approved, up to $250,000 can be deposited into your business checking account in as little as 24 hours — with no pesky monthly fees or restrictions on how to spend the funds.Eligibility requirements are steep, though: To qualify, your business must operate for at least 24 months with a minimum of $40,000 in monthly revenue. Note that repayment terms are short — either six or 12 months.
| Term length | 12, 18 or 24 months |
| Max. amount | $100,000 |
| Starting APR | Starting at 39.90% APR |
| Min. credit score | 625 |
| Min. time in business | 12 months |
| Min. annual revenue | $100,000 |
Annual gross revenue of $100,000 or more to qualify
Does not lend to certain industries, such as nonprofits and select states (Nevada, North Dakota or South Dakota)
OnDeck’s business line of credit doesn’t require collateral, making it an excellent choice for an unsecured business loan, although it may require a personal guarantee and a blanket lien on business assets. You might receive funds within the same business day if you submit your loan application before 10:30 a.m. ET. Otherwise, it can take two to three business days.OnDeck’s lines of credit come with a 24-month term, but the time resets after each withdrawal. Furthermore, you only need to pay a monthly maintenance fee without any added draw fees. OnDeck doesn’t disclose current rates, but its website states the average APR as 48.9%.
| Term length | 12 and 24 weeks |
| Max. amount | $150,000 |
| Est. interest rate | 4.66% for 12 weeks 8.99% for 24 weeks |
| Min. credit score | 600 |
| Min. time in business | 6 months |
| Min. annual revenue | $100,000 |
Weekly repayments required over short terms (12 or 24 weeks)
Annual gross revenue of $100,000 or more to qualify
If you’re looking for a business line of credit for bad credit, Fundbox might have the perfect solution. With minimum credit requirements starting at 600, Fundbox offers revolving funds up to $150,000. Interest rates start at 4.66% for 12 weeks and 8.99% for 24 weeks.Businesses must operate for at least six months and have an annual revenue of $100,000 or greater to qualify for Fundbox’s business credit lines. If approved, you can receive funds the next business day. However, make sure you can manage the short repayment period. If not, a long-term business loan might suit you better.
| Term length | Revolving, no annual review |
| Max. amount | $150,000 |
| Est. interest rate | Prime + 1.75% to Prime + 9.75% |
| Min. credit score | 680 |
| Min. time in business | 2 years |
| Min. annual revenue | Not disclosed |
Two years in business to qualify
Lack of transparency about minimum credit score requirement
Wells Fargo has over 7,000 branches in 38 states, making it a top choice for a personalized brick-and-mortar experience. Though traditional banks like Wells Fargo may have stricter eligibility requirements and slower times to funding, the benefits of using a traditional bank include competitive rates, plus in-person support and services.You can access $10,000 to $150,000 with a Wells Fargo business line of credit. If you anticipate needing more funds, consider an SBA loan from Wells Fargo, such as an SBA 7(a) loan. Applications can be completed online or in person, with approval taking up to two weeks, depending on the type of credit line.
A business line of credit is a revolving, flexible form of small business funding that only charges interest on the amount you use. While 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, and once you repay the borrowed amount, you can withdraw funds again.
A line of credit can help cover unexpected business expenses, such as inventory, payroll or seasonal fluctuations in revenue.
On this page
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.
Business loan interest rates for a business line of credit depend on the amount and terms you choose, your credit score and the lender’s current offerings. Typically, rates can range between 4% to 80% APR or higher.
In addition, some lenders may charge the following fees:
Business lines of credit can be secured or unsecured. A secured business line of credit 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 some advantages, such as possible higher spending limits and lower interest rates.
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, typically ranging from 13.74% to 29.99%. Additionally, there are limitations to credit card usage. For example, you can’t use a credit card for leasing expenses, payroll financing or certain vendor invoices, whereas a small business credit line can cover those expenses.
A benefit of taking out a business line of credit is that interest only applies to the amount you withdraw. Business line of credit interest 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.
A business line of credit can help cover short-term business loan or emergency expenses. Opening a business line of credit gives you access to immediate funding without the pressure to use the total 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 credit | Small business loan | |
|---|---|---|
| Repayment schedule | Repayments 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. |
| Terms | 12 weeks to five years | 3 months to 25 years |
| Use of funds | Short-term or immediate expenses | One-time or long-term expenses |
Even if you’re eligible for a business line of credit, it might not be the best financing for your business’s specific needs.
| Pros | Cons |
|---|---|
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 |
Most lenders generally want a very good or 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 improving 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 and other types of small business loans. This is because most lenders require businesses to have been in operation for at least one year, sometimes longer, with a solid track record of steady revenue.
Fortunately, some online lenders are willing to work with startups or those with limited or bad credit. Be sure to research these lenders, though, since many prey on vulnerable companies. Spend time reading reviews and asking questions before signing the dotted line.
You may be eligible for a credit line increase once you’ve established a repayment history with your lender and your cash flow and income have improved. Not only will a credit limit increase help you access more funds, but it could also boost business 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. It’s best to check with each lender to determine which are more apt to 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. That said, 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 your business or take it to the next levels:
