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Business Line of Credit: Compare the Best Options

By Randa Kriss
Last updated on February 28, 2024
Edited bySally Lauckner
Fact checked and reviewed

⏰ Estimated read time: 9 minutes

A business line of credit can finance short-term expenses, like payroll or inventory. Both traditional and online lenders offer business lines of credit.

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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.
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 10 business lines of credit

LenderNerdWallet RatingMax loan amountMin. credit scoreNext steps

Bank of America Business Advantage Unsecured Line of Credit

5.0/5

Best for Bank business lines of credit

Undisclosed700

SBA CAPLines of credit

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Best for SBA lines of credit

$5,000,000650

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Wells Fargo BusinessLine® Line of Credit

5.0/5

Best for Unsecured business lines of credit

$150,000680

Bank of America Cash Secured Line of credit

5.0/5

Best for Secured business lines of credit

Undisclosed670

Fundbox - Line of credit

5.0/5

Best for Business lines of credit for bad credit

$150,000600

Headway Capital - Line of credit

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5.0/5

Best for Startup business lines of credit

$100,000625

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Bluevine - Line of credit

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5.0/5

Best for Fast business lines of credit

$250,000625

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Wells Fargo Small Business Advantage® Line of Credit

5.0/5

Best for SBA lines of credit for startups

$50,000680

OnDeck - Line of credit

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5.0/5

Best for Easy business lines of credit

$100,000625

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American Express® Business Line of Credit

5.0/5

Best for American Express customers

$250,000660

Here are 10 business lines of credit

Best for Bank business lines of credit

Bank of America

Max Amount

Undisclosed

Min. Credit Score

700

Best for SBA lines of credit

U.S. Small Business Administration

Max Amount

$5,000,000

Min. Credit Score

650

Best for Unsecured business lines of credit

Wells Fargo

Max Amount

$150,000

Min. Credit Score

680

Best for Secured business lines of credit

Bank of America

Max Amount

Undisclosed

Min. Credit Score

670

Best for Business lines of credit for bad credit

Fundbox

Max Amount

$150,000

Min. Credit Score

600

Best for Startup business lines of credit

Headway Capital

Max Amount

$100,000

Min. Credit Score

625

Best for Fast business lines of credit

Bluevine

Max Amount

$250,000

Min. Credit Score

625

Best for SBA lines of credit for startups

Wells Fargo

Max Amount

$50,000

Min. Credit Score

680

Best for Easy business lines of credit

OnDeck

Max Amount

$100,000

Min. Credit Score

625

Best for American Express customers

American Express Business Blueprint™

Max Amount

$250,000

Min. Credit Score

660

I'M INTERESTED IN:

Our pick for

Bank business lines of credit

Bank of America offers business lines of credit in amounts of $10,000 or more that are well-suited for borrowers with strong credit.

Bank of America Business Advantage Unsecured Line of Credit

Max Loan Amount
Undisclosed
Min. credit score
700
Established businesses with strong credit can access this revolving line of credit, no collateral required.

Max loan

Undisclosed

Min. Credit score

700

Established businesses with strong credit can access this revolving line of credit, no collateral required.

Our pick for

SBA lines of credit

The SBA CAPLines program offers four credit line options that can be used for a variety of business purposes.

SBA CAPLines of credit

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Max Loan Amount
$5,000,000
Min. credit score
650
Est. APR
11.50-15.00%
The SBA CAPLines program offers four lines of credit that can help businesses meet short-term and cyclical working capital needs. These credit lines have competitive interest rates and repayment terms.

Max loan

$5,000,000

Min. Credit score

650

Apr range

11.50-15.00%

The SBA CAPLines program offers four lines of credit that can help businesses meet short-term and cyclical working capital needs. These credit lines have competitive interest rates and repayment terms.

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Our pick for

Unsecured business lines of credit

Wells Fargo offers business lines of credit of up to $150,000 and doesn’t require physical collateral. Borrowers will be required to sign a personal guarantee, however.

Wells Fargo BusinessLine® Line of Credit

Max Loan Amount
$150,000
Min. credit score
680
Est. APR
10.25-18.25%
This Wells Fargo line of credit offers competitive rates for businesses with at least two years in operation.

Max loan

$150,000

Min. Credit score

680

Apr range

10.25-18.25%

This Wells Fargo line of credit offers competitive rates for businesses with at least two years in operation.

Our pick for

Secured business lines of credit

Companies with at least six months in operation can use Bank of America’s cash secured line of credit to build business credit.

Bank of America Cash Secured Line of credit

Max Loan Amount
Undisclosed
Min. credit score
670
Bank of America’s Cash Secured line of credit can help startups cover working capital needs and establish business credit.

Max loan

Undisclosed

Min. Credit score

670

Bank of America’s Cash Secured line of credit can help startups cover working capital needs and establish business credit.

Our pick for

Business lines of credit for bad credit

Fundbox offers quick funding of up to $150,000 for borrowers with a credit score of 600 or higher.

Fundbox - Line of credit

Max Loan Amount
$150,000
Min. credit score
600
Est. APR
36.00-99.00%
Fundbox offers a business line of credit to fill a cash flow gap, and qualifying is easier than with other lenders.
May fund quickly

Max loan

$150,000

Min. Credit score

600

Apr range

36.00-99.00%

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

Our pick for

Startup business lines of credit

Headway Capital offers fast funding up to $100,000 for borrowers with at least six months in business.

Headway Capital - Line of credit

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Max Loan Amount
$100,000
Min. credit score
625
Est. APR
35.00-80.00%
Headway Capital offers a fast and flexible line of credit for borrowers who may not qualify for more traditional options.

Max loan

$100,000

Min. Credit score

625

Apr range

35.00-80.00%

Headway Capital offers a fast and flexible line of credit for borrowers who may not qualify for more traditional options.

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Our pick for

Fast business lines of credit

Bluevine offers a business line of credit of up to $250,000 and can fund applications in as little as 24 hours.

Bluevine - Line of credit

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Max Loan Amount
$250,000
Min. credit score
625
Est. APR
20.00-50.00%
Bluevine's line of credit provides fast working capital for short-term borrowing needs.
May fund quickly

Max loan

$250,000

Min. Credit score

625

Apr range

20.00-50.00%

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

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Our pick for

SBA lines of credit for startups

This SBA-backed line of credit offers up to $50,000 for startups with less than two years in business.

Wells Fargo Small Business Advantage® Line of Credit

Max Loan Amount
$50,000
Min. credit score
680
Est. APR
13.00-15.00%
Wells Fargo offers an unsecured line of credit that’s designed for borrowers with less than two years in business.

Max loan

$50,000

Min. Credit score

680

Apr range

13.00-15.00%

Wells Fargo offers an unsecured line of credit that’s designed for borrowers with less than two years in business.

Our pick for

Easy business lines of credit

OnDeck offers business lines of credit of up to $100,000 with a streamlined application process and fast funding times.

OnDeck - Line of credit

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Max Loan Amount
$100,000
Min. credit score
625
Est. APR
39.90-77.90%
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

Max loan

$100,000

Min. Credit score

625

Apr range

39.90-77.90%

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.

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Our pick for

American Express customers

Existing American Express customers can use their accounts to find out if they prequalify for this business line of credit.

American Express® Business Line of Credit

Max Loan Amount
$250,000
Min. credit score
660
The American Express® Business Line of Credit is a good option for business owners with fair credit who want access to working capital.

Max loan

$250,000

Min. Credit score

660

The American Express® Business Line of Credit is a good option for business owners with fair credit who want access to working capital.

How Much Do You Need?

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What is a business line of credit?

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.
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.
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.

How does a business line of credit work?

Business lines of credit are available from banks, credit unions and online lenders. Although funding amounts and repayment terms vary, lines of credit typically have lower maximums and shorter terms compared to traditional business term loans.

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, your 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 your 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 UCC 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 line of credit vs. credit card

Business credit cards are technically lines of credit, but they differ from traditional business lines of credit in several ways:
Business line of credit
Business credit card
Higher credit limit.
Lower credit limit.
Provides actual cash in your bank account when you make a draw.
Cards are used for purchases; you can get cash, but you’ll be charged a cash advance fee to do so.
May be secured by collateral.
Can be secured by collateral, but not as common.
Doesn’t typically include rewards.
Often have rewards or cash back for spending; rewards are typically related to business expenses.
No interest-free period.
May include 0% interest promotion, which allows you to pay no interest on your balance for a specific time period after signing up for the card.
Lower interest rates than credit cards.
Higher interest rates than lines of credit.
Overall, business credit cards tend to 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 rates and fees

Current business line of credit rates can range from 10% to 99% APR. The interest rate you receive will vary based on your lender, credit score, financial history and time in business, among other factors.
In general, the stronger your credentials, the lower interest rates you’ll receive. Banks tend to offer more competitive business line of credit rates compared to online lenders.
Depending on your lender, you may also have to pay fees on your line of credit, 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.

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, good 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 Headway Capital 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 can follow these steps:

1. Evaluate your financing needs

You’ll initially want to determine why you need funding and how quickly you need it. If you’re looking for a working capital line of credit to cover payroll, for example, you may need financing as quickly as possible. On the other hand, if you want to keep a line of credit in your back pocket as an emergency fund, you may not be in such a rush.
It's also important to determine how much capital you can afford. You can use a business line of credit calculator to estimate potential payments and interest costs.

2. Review business line of credit requirements

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.
Traditional lenders, like banks and credit unions, will likely have stricter qualifications, requiring multiple years in business and a strong credit history. Online lenders can be more lenient and some may be willing to work with startups and/or borrowers with bad credit.
At a minimum, therefore, you’ll want to be able to meet these business line of credit requirements:
  • Credit score: 600 or higher.
  • Time in business. Six months or more.
  • Annual revenue. $50,000 or more.
If you’re looking for a secured business line of credit, you should also make sure you know what assets you’re going to put up as collateral and how much they’re worth.

3. Research and compare lenders

Once you have a better understanding of your financing needs and qualifications, you can research and compare small-business lenders to find the right option for your company.
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.

4. Gather required documents and apply

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 and underwriting process.

5. Review your loan agreement and get funds

Once you’ve been approved, your lender will send you a business line of credit agreement to review and sign. You’ll want to review it thoroughly to make sure you understand all of the terms and conditions.
You might ask a business advisor or attorney to look over the document as well. If you have any questions or concerns, you should reach out to your lender for clarification before signing.
After you’ve signed the loan agreement, you’ll be able to draw on your credit line as needed. Your lender may require you to make a minimum draw amount, $1,000, for example, so keep this in mind as you anticipate your financial needs.

Business line of credit calculator

Loan calculator icon

Business line of credit calculator

When you draw from a business line of credit, you only pay interest on the funds that you borrow. You then repay the funds over time, based on a schedule set by your lender.

Enter a withdrawal amount, repayment term and annual interest rate to estimate your monthly payment, total interest costs and the total amount repaid.

Not sure? See estimated rates on online business loans and SBA loans.
Monthly payment
$0.00
Total payments
$0.00
Total interest paid
$0.00

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 February 28, 2024

Methodology

NerdWallet’s review process evaluates and rates small-business loan products from both traditional and online lenders.
We collect over 30 data points on each lender, taking into account features we consider to be small-business friendly, including: transparency of rates and terms, flexible payment options, fast funding times, accessible customer service, reporting of payments to business credit bureaus and responsible lending practices.
Each business line of credit option on this list meets the following criteria:
- Maximum loan amount of at least $50,000.
- Transparent rates and repayment terms.
- Funding available within two weeks of applying.
- Personal credit score requirements of 700 or below.
- No more than two years in business required.

Wondering if you qualify?

It’s possible to get a business loan even if you have bad credit. Bad-credit business loans are available from alternative sources, like online or nonprofit lenders.

Learn more

Frequently Asked Questions

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