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Business Line of Credit: Compare the Best Options

A business line of credit can finance short-term expenses, like payroll or inventory. Both traditional and online lenders offer business lines of credit.
Written by Randa Kriss
Edited by Sally Lauckner
Last updated on October 18, 2022

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A business line of credit allows you to borrow up to a certain limit and only pay interest on the money 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, learn more about how business lines of credit work and compare some of the best options from online and bank lenders.

How much do you need?

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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 lines of credit

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Lender
Best for
Max loan amount
Min. credit score
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Kabbage - Line of credit

on Kabbage's website

Best for Business lines of credit with monthly payments$250,000640

on Kabbage's website

PNC Bank - Line of credit

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Best for Bank business lines of credit$100,000720

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Fundbox - Line of credit

with Fundera by NerdWallet

Best for Business lines of credit for bad credit$150,000600

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OnDeck - Line of credit

with Fundera by NerdWallet

Best for Unsecured business lines of credit$100,000625

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Bluevine - Line of credit

with Fundera by NerdWallet

Best for Startup business lines of credit$250,000625

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Here are 5 business lines of credit

Best for Business lines of credit with monthly payments

Kabbage

Max Amount

$250,000

Min. Credit Score

640

Best for Bank business lines of credit

PNC Bank

Max Amount

$100,000

Min. Credit Score

720

Best for Business lines of credit for bad credit

Fundbox

Max Amount

$150,000

Min. Credit Score

600

Best for Unsecured business lines of credit

OnDeck

Max Amount

$100,000

Min. Credit Score

625

Best for Startup business lines of credit

Bluevine

Max Amount

$250,000

Min. Credit Score

625

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

Read Review

on Kabbage's website

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 lines of credit of up to $100,000 that are well-suited for established businesses with strong credit. The PNC business line of credit can be funded as quickly as the same business day.

PNC Bank - Line of credit

Read Review

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Max Loan Amount
$100,000
Min. credit score
720
Est. APR
14.49-16.49%
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

Fundbox offers quick funding of up to $150,000 for business owners with credit scores of 600 or higher.

Fundbox - Line of credit

Read Review

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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

Unsecured business lines of credit

OnDeck offers business lines of credit of up to $100,000 and doesn’t require physical collateral. Borrowers are subject to UCC blanket liens, however, and will be required to sign a personal guarantee.

OnDeck - Line of credit

Read Review

with Fundera by NerdWallet

Max Loan Amount
$100,000
Min. credit score
625
Est. APR
29.90-65.90%
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

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

Read Review

with Fundera by NerdWallet

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?

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How does a business line of credit work?

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 only pay interest on 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 business 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.

Secured vs. unsecured business lines of credit

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 lines of credit vs. business credit cards

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.

Business line of credit calculator

Where to get a business line of credit

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 history, 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 business line of credit 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.

How to get a business line of credit

To get a business line of credit, you'll initially want to determine how much funding you need and how quickly you need it. Next, you'll want to evaluate your business's credentials — time in business, annual revenue, personal credit score — to determine what lines of credit you can qualify for.
Once you have a better understanding of your financing needs and qualifications, you can research and compare lenders to find the right option for your business. Ultimately, 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 credit and financial history — and ask you to provide 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.
Depending on your lender, it may take anywhere from 24 hours to several weeks to complete the application, underwriting and funding processes.

Find the right business loan

The best business loan is generally the one with the lowest rates and most ideal terms. But other factors — like time to fund and your business’s qualifications — can help determine which option you should choose. NerdWallet recommends comparing small-business loans to find the right fit for your business.
Last updated on October 18, 2022

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