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Business Line of Credit: How It Works and Best Options

Steve NicastroNovember 21, 2019

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Online lenders offer business lines of credit up to $250,000 for short-term financing needs.

Easily get real, personalized small business loan rates to compare -- not just ranges or estimates.

It's free and won't affect your credit.

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on Lendio's website

Our picks for

Business lines of credit up to $100,000

Fundbox, StreetShares and OnDeck offer business lines of credit up to $100,000 for short-term financing needs.

Fundbox - Line of credit

Fundbox - Line of credit

Est. APR

10.10 - 79.80%

Min. Credit Score

500

Fundbox offers a business line of credit to fill a cash-flow gap, and qualifying is easier than with other lenders.

Pros

  • Cash can be available by the next day.
  • Low minimum credit score requirement.

Cons

  • Rates are high compared to other online lenders.
Read full review

Qualifications

  • Minimum credit score: 500.
  • Minimum time in business: 3 months.
  • Minimum annual revenue: $50,000.
StreetShares

StreetShares - Line of credit

Est. APR

8.00 - 39.90%

Min. Credit Score

600

StreetShares offers a business line of credit for newer businesses that need to manage cash flow or buy inventory.

Pros

  • Competitive rates among online lenders.
  • No prepayment penalty.

Cons

  • Requires weekly repayments.
  • Financing amounts limited to 20% of annual revenue.
Read full review

Qualifications

  • Minimum credit score: 600.
  • Minimum time in business: 1 year.
  • Minimum annual revenue: $75,000.
  • No bankruptcies in the past 3 years.
  • Unavailable to borrowers in North Dakota, South Dakota, Rhode Island, Montana, and Nevada. Unavailable to sole proprietorships in Delaware, Minnesota, Nebraska, New Jersey, or New York.
OnDeck - Line of credit

OnDeck - Line of credit

Est. APR

13.99 - 63.00%

Min. Credit Score

600

OnDeck offers a fast line of credit for small-business owners with less-than-stellar credit who need to manage cash flow or buy inventory.

Pros

  • Cash can be available within the same business day.
  • Requires low minimum credit score.
  • Less paperwork than most lenders.

Cons

  • Fixed-fee structure means early repayment will not save interest.
  • Requires weekly repayments.
  • Requires personal guarantee.
Read full review

Qualifications

  • Minimum credit score: 600.
  • Minimum time in business: 1 year.
  • Minimum annual revenue: $100,000.
  • No bankruptcies in the past 2 years.

Our picks for

Business lines of credit up to $250,000

Kabbage and BlueVine offer fast funding for borrowers, with max borrowing amounts of $250,000.

Kabbage - Line of credit

Kabbage - Line of credit

Est. APR

24.00 - 99.00%

Min. Credit Score

560

Kabbage provides fast loans for business owners with bad personal credit, but rates can be high.

Pros

  • Financing up to $250,000 available within a few days.
  • Accepts low credit scores.

Cons

  • Rates are high compared to other online lenders.
  • Must have online checking or PayPal account to verify cash flow.
  • Fixed-fee structure means early repayment does not save interest.
Read full review

Qualifications

  • Minimum credit score: 560.
  • Minimum time in business: 1 year.
  • Minimum annual revenue: $50,000.
BlueVine - Line of credit

BlueVine - Line of credit

Est. APR

15.00 - 78.00%

Min. Credit Score

600

BlueVine's line of credit provides fast working capital for short-term borrowing needs.

Pros

  • Offers options for businesses less than a year old.
  • Cash can be available within 12 to 24 hours.

Cons

  • Short repayment term results in higher payment amounts.
  • Requires personal guarantee.
  • Not available in North Dakota, South Dakota or Vermont.
Read full review

Qualifications

  • 6-month line of credit
  • Minimum credit score: 600.
  • Minimum time in business: 6 months.
  • Minimum annual revenue: $100,000.
  • 12-month line of credit
  • Minimum credit score: 620.
  • Minimum time in business: 2 years.
  • Minimum annual revenue: $450,000.

Easily get real, personalized small business loan rates to compare -- not just ranges or estimates.

It's free and won't affect your credit.

Get Started

on Lendio's website

Summary of Business Line of Credit: How It Works and Best Options

LenderBest ForEst. APRMin. Credit Score
Fundbox - Line of credit

Fundbox - Line of credit

Business lines of credit up to $100,000

10.10 - 79.80%

500

StreetShares

StreetShares - Line of credit

Business lines of credit up to $100,000

8.00 - 39.90%

600

OnDeck - Line of credit

OnDeck - Line of credit

Business lines of credit up to $100,000

13.99 - 63.00%

600

Kabbage - Line of credit

Kabbage - Line of credit

Business lines of credit up to $250,000

24.00 - 99.00%

560

BlueVine - Line of credit

BlueVine - Line of credit

Business lines of credit up to $250,000

15.00 - 78.00%

600

LenderBest ForEst. APRMin. Credit Score
Fundbox - Line of credit

Fundbox - Line of credit

Business lines of credit up to $100,000

10.10 - 79.80%

500

StreetShares

StreetShares - Line of credit

Business lines of credit up to $100,000

8.00 - 39.90%

600

OnDeck - Line of credit

OnDeck - Line of credit

Business lines of credit up to $100,000

13.99 - 63.00%

600

Kabbage - Line of credit

Kabbage - Line of credit

Business lines of credit up to $250,000

24.00 - 99.00%

560

BlueVine - Line of credit

BlueVine - Line of credit

Business lines of credit up to $250,000

15.00 - 78.00%

600

How a business line of credit works

A business line of credit differs from a term loan, which provides a one-time lump sum of cash upfront, repaid over a fixed period, or term.

With a line of credit, you can keep reusing and repaying it as often as you’d like, as long as you make payments on time and don’t exceed your credit limit. Most lenders allow you to repay your full balance early to save on interest costs.

Line of credit borrowing limits — ranging from $1,000 to $250,000 — are smaller than a term loan.

Business lines of credit with lower credit limits are typically unsecured, which means collateral such as real estate or inventory is not required.

How to qualify for a business line of credit

Most traditional lenders, such as banks, require businesses to have strong revenue and at least a few years of history to qualify for a line of credit. Larger lines of credit may require collateral, which can be seized by the lender if you fail to make payments.

To apply, lenders typically require the following documentation: personal and business tax returns, bank account information and business financial statements, such as profit-and-loss statements and a balance sheet.

Online business lenders typically have looser qualifications than banks. However, these lenders are also likely to charge higher rates than banks and may have lower credit limits.

At a minimum, you’ll need at least six months in business and $25,000 in annual revenue to qualify for a business line of credit. Although some lenders don’t set a minimum credit score, borrowers most likely will need a score of 500 or higher to qualify.

Business credit cards

Business credit cards are also lines of credit, but differ from a traditional business line of credit in several ways.

A business line of credit provides a higher credit limit, may be secured by collateral and provides actual cash to your bank account when you make a draw. You can get cash through a business credit card, but you’ll be charged fees and a higher APR to do so. Other common fees for business credit cards include annual fees and late-payment fees.

Business credit cards work best for smaller ongoing expenses and for newer businesses without established finances, while a business line of credit works best for larger ongoing expenses and more mature businesses.

Just like personal credit cards, business credit cards can provide rewards or cash back for spending. Rewards are typically related to business expenses, such as office supplies, gas, internet and cable. They may also offer 0% interest promotions, which allow you to pay no interest on your balance for a specific time period after signing up for the card.

Find and compare small-business financing

To compare other types of small-business financing, check out NerdWallet’s loan comparison tool. We gauged lender trustworthiness, market scope and user experience among other factors, and arranged them by categories that include your revenue and how long you’ve been in business.

Last updated on November 21, 2019

To recap our selections...

NerdWallet's Business Line of Credit: How It Works and Best Options