A business line of credit allows you to borrow up to a certain limit and pay interest on only the portion of money that you borrow — similar to the way a credit card works. You then repay the funds and can continue to draw on the line.
Unlike a traditional small-business loan — where you receive a lump sum of capital and repay it over a specific period of time, with interest — a business line of credit is a more flexible form of financing. Business lines of credit can be used for a variety of short-term needs, such as managing cash flow, buying inventory or covering payroll.
Below, compare some of the best options for business lines of credit and learn how to apply for financing.
How much do you need?
We’ll start with a brief questionnaire to better understand the unique needs of your business.
Once we uncover your personalized matches, our team will consult you on the process moving forward.
Here are 5 business line of credit options for you
Lender | Best for | Max loan amount | Min. credit score | Next steps |
|---|---|---|---|---|
Kabbage - Line of credit on Kabbage's website | Best for Business lines of credit with monthly payments | $250,000 | 640 | on Kabbage's website |
PNC Bank - Line of credit with Fundera by NerdWallet | Best for Bank business lines of credit | $100,000 | 720 | with Fundera by NerdWallet |
OnDeck - Line of credit with Fundera by NerdWallet | Best for Business lines of credit for bad credit | $100,000 | 600 | with Fundera by NerdWallet |
Fundbox - Line of credit with Fundera by NerdWallet | Best for Unsecured business lines of credit | $150,000 | 600 | with Fundera by NerdWallet |
Bluevine - Line of credit with Fundera by NerdWallet | Best for Startup business lines of credit | $250,000 | 625 | with Fundera by NerdWallet |
Our pick for
Business lines of credit with monthly payments
Kabbage offers credit lines up to $250,000 that are repaid on a monthly basis.
Kabbage - Line of credit
Max Loan Amount
$250,000
Min. Credit Score
640
Kabbage loans are a good option for business owners with fair credit who want quick access to working capital.
Our pick for
Bank business lines of credit
PNC offers a line of credit of up to $100,000 that’s well suited for established businesses with strong credit. The PNC business line of credit can be funded as quickly as the same business day.
with Fundera by NerdWallet
PNC Bank - Line of credit
with Fundera by NerdWallet
Max Loan Amount
$100,000
Min. Credit Score
720
Est. APR
12.24-14.24%
PNC offers a revolving line of credit that works similarly to a credit card, but you’ll need excellent credit and multiple years in business to qualify.
Our pick for
Business lines of credit for bad credit
OnDeck offers quick funding of up to $100,000 for business owners with credit scores of 600 or higher.
OnDeck - Line of credit
Max Loan Amount
$100,000
Min. Credit Score
600
Est. APR
11.00-61.90%
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.
May fund quickly
Our pick for
Unsecured business lines of credit
Fundbox offers business lines of credit of up to $150,000 and doesn’t require physical collateral. Borrowers are subject to UCC blanket liens, however, and may be required to sign a personal guarantee.
Fundbox - Line of credit
Max Loan Amount
$150,000
Min. Credit Score
600
Est. APR
10.10-79.80%
Fundbox offers a business line of credit to fill a cash-flow gap, and qualifying is easier than with other lenders.
May fund quickly
Our pick for
Startup business lines of credit
Bluevine offers fast funding up to $250,000 for startups with six or more months in business.
Bluevine - Line of credit
Max Loan Amount
$250,000
Min. Credit Score
625
Est. APR
15.00-78.00%
Bluevine's line of credit provides fast working capital for short-term borrowing needs.
May fund quickly
How Much Do You Need?
A business line of credit works similarly to a credit card. With a line of credit, you receive access to a set amount of capital — say, $150,000 — and can draw funds as needed. You pay interest on only the funds that you draw.
You then repay the funds over time, typically on a weekly or monthly schedule. Many lenders allow you to repay your full balance early to save on interest costs. Some lenders charge additional fees, such as:
- Origination fee: Fee charged to process your application.
- Account maintenance fee: Monthly or annual fee associated with managing your account and keeping your business line of credit active.
- Draw fee: Fee charged each time you draw on your credit line.
- Inactivity fee: A lender may charge this fee if you don’t draw from your line of credit within a specified period of time.
You can continue to draw on your credit line as often as you’d like, as long as you make payments on time and don’t exceed your credit limit. Because small-business lines of credit are revolving, they’re much more flexible than business term loans, which require you to repay a lump sum of funds over a fixed term.
Banks and credit unions
Banks and credit unions can offer different types of business credit lines, including secured and unsecured business lines of credit, as well as SBA lines of credit.
Although these lenders can offer business lines of credit with competitive interest rates, you’ll typically need to meet strict requirements to qualify. You’ll likely need to have strong revenue and credit, and several years in business.
Compared to online lenders, banks and credit unions can also be more likely to require physical collateral to secure your credit line (especially for larger limits), as well as more likely to charge additional fees, including annual and inactivity fees.
Online lenders
Online lenders, like Bluevine and Fundbox, generally have more flexible qualification requirements compared to banks and credit unions. Some online lenders will work with startups or businesses with bad credit.
Online lenders typically have streamlined application processes and fewer fees, and may be able to issue small-business lines of credit in a matter of days. However, these lenders are also likely to charge higher interest rates than banks and may have lower credit limits.
You can apply for a business line of credit through a bank, credit union, online lender, or even work with an online marketplace to submit a single application and compare offers from multiple lenders at the same time.
Interest rates, borrowing limits and qualifications can vary by lender.
As part of your application, lenders will typically consider your personal credit score, annual revenue, time in business — and ask you to provide financial documentation, such as:
- Personal and business tax returns.
- Personal and business bank statements.
- Business financial statements (e.g., profit and loss statement or a balance sheet).
You may also be required to provide physical collateral or sign a personal guarantee.
A secured business line of credit requires you to put up assets such as inventory or property as collateral. If you fail to pay back the credit line, a lender could seize your assets.
Unsecured business lines of credit, on the other hand, don’t require collateral, but some lenders may still require a personal guarantee or a lien on a business’s assets.
A personal guarantee gives a lender the right to go after your personal assets, like your house, if you default on a loan. A lien is similar; a lender can seize your business assets if you haven’t repaid a loan.
When comparing lenders, ask whether they require collateral, a personal guarantee or a lien so that you can find the option that’s best for your business.
Business credit cards are technically lines of credit, but they differ from traditional business lines of credit in several ways.
A business line of credit can provide a higher credit limit, may be secured by collateral and provides actual cash in your bank account when you make a draw. You can get cash with a business credit card, but you’ll be charged fees (usually called a cash advance fee) and a higher APR to do so.
Business credit cards, however, can provide rewards or cash back for spending — which is not something offered by traditional lines of credit. 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.
Business credit cards work best for smaller ongoing expenses and for newer businesses without established finances, while business lines of credit work best for larger ongoing expenses and more mature businesses.
For a look beyond business lines of credit, check out NerdWallet’s list of best small-business loans for business owners. Our recommendations are based on the market scope and track record of lenders, the needs of business owners and an analysis of rates and other factors, so you can make the right financing decision.
Last updated on January 26, 2022
To recap our selections...
Business Line of Credit: Compare the Best Options
- Kabbage - Line of credit: Best for Business lines of credit with monthly payments
- PNC Bank - Line of credit: Best for Bank business lines of credit
- OnDeck - Line of credit: Best for Business lines of credit for bad credit
- Fundbox - Line of credit: Best for Unsecured business lines of credit
- Bluevine - Line of credit: Best for Startup business lines of credit
Frequently Asked Questions
A business line of credit works best when you need to finance short-term expenses, such as replenishing inventory or covering unexpected costs. A small-business term loan, on the other hand, finances large one-time expenses, like equipment purchases.
A business credit card can provide many of the same benefits as a business line of credit, such as access to repeat financing and the ability to build business credit. If you struggle with thin or poor credit, a business credit card for bad credit can give you a jump start.
Online lenders, banks and credit unions offer business lines of credit. Banks and credit unions typically require strong business revenue and at least a few years of history to qualify. Online lenders have looser qualifications, but may charge higher rates. Compare your options to find the one that best fits your financing needs.
For newer businesses, it can be difficult to get a small-business line of credit. Traditional lenders, such as banks, typically require businesses to have several years of operations, revenue and strong finances to secure any type of financing.