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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 January 26, 2022
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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.

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Summary of Business Line of Credit: Compare the Best Options

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LenderBest ForMax Loan AmountMin. Credit ScoreNext Steps

PNC Bank - Line of credit

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Best for Bank business lines of credit$100,000720
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OnDeck - Line of credit

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Best for Business lines of credit for bad credit$100,000600
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Fundbox - Line of credit

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Best for Unsecured business lines of credit$150,000600
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BlueVine - Line of credit

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Best for Startup business lines of credit$250,000600
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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.

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PNC Bank - Line of credit

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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.

Pros

  • Bank line of credit with competitive interest rates.
  • Can fund as quickly as the same business day.
  • Monthly repayments with no set term.

Cons

  • Requires high minimum credit score and multiple years in business.
  • Requires personal guarantee.
  • Businesses in certain states and industries are ineligible.
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Qualifications:

  • Minimum credit score: 720.
  • Minimum time in business: Three years.
  • Minimum annual revenue: $100,000.
  • APR is the market prime rate plus either 7.49% or 9.49%.

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.

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OnDeck - Line of credit

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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.

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.
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Qualifications:

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

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Fundbox - Line of credit

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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.

Pros

  • Financing available within one business day after approval.
  • Simple application with minimal documentation required.
  • Startup-friendly—accepts borrowers with a minimum of six months in business.
  • Low minimum credit score requirement.
  • No prepayment penalties, account maintenance fees or inactivity fees.

Cons

  • Rates are high compared to traditional banks.
  • May require personal guarantee.
  • Can’t be used to build business credit.
  • Weekly repayments required over a short term (maximum of 24 weeks).
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Qualifications:

  • Minimum credit score: 600.
  • Minimum time in business: 6 months.
  • Minimum annual revenue: $100,000.
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.

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BlueVine - Line of credit

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Max Loan Amount

$250,000

Min. Credit Score

600

Est. APR

15.00-78.00%

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

Pros

  • Cash can be available within 12 to 24 hours.
  • Multiple term lengths for different financing needs.
  • Low minimum credit score requirement.
  • Startup-friendly; accepts borrowers with a minimum of six months in business.

Cons

  • May require weekly repayments.
  • Requires personal guarantee.
  • Not available in North Dakota, South Dakota or Vermont.
  • Rates can be high compared to traditional lenders.
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Qualifications:

  • Minimum credit score: 600.
  • Minimum time in business: 6 months.
  • Minimum annual revenue: $120,000.
May fund quickly

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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 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.

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, 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.

How to get a business line of credit

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.

Secured vs. unsecured business line 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.

Compare small-business loans

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

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Business Line of Credit: Compare the Best Options

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