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Startup Business Line of Credit: Best Options and How to Qualify

By Randa Kriss
Last updated on June 11, 2024
Edited bySally Lauckner
Fact checked and reviewed
Startup business lines of credit can help new companies manage cash flow or cover short-term expenses. Interest rates may run high, however.

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A startup business line of credit is a flexible financing product that can help new businesses manage cash flow gaps, as well as pay for short-term working capital needs. Although it can be difficult for startups to access traditional small-business loans, some online lenders offer lines of credit to borrowers with one year or less in business.
Business lines of credit let you withdraw funds up to a predetermined amount — and only pay interest on the money you withdraw. Once you repay the funds you’ve borrowed, you can continue to draw on the line. These are our picks for the best startup business lines of credit for new businesses.

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 7 startup business lines of credit

LenderNerdWallet RatingMax loan amountMin. credit scoreNext steps

Headway Capital - Line of credit

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5.0/5

Best for Fast business lines of credit for startups

$100,000625

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Fundbox - Line of credit

5.0/5

Best for Startup business lines of credit for bad credit

$150,000600
Read Review

OnDeck - Line of credit

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5.0/5

Best for Unsecured business lines of credit for startups

$100,000625

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Wells Fargo Small Business Advantage® Line of Credit

5.0/5

Best for Bank startup business lines of credit

$50,000680
Read Review

Bank of America Cash Secured Line of credit

5.0/5

Best for Secured business lines of credit for startups

Undisclosed670
Read Review

American Express® Business Line of Credit

5.0/5

Best for Startup business lines of credit with monthly payments

$250,000660
Read Review

SBA CAPLines of credit

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Best for Seasonal businesses

$5,000,000650

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Here are 7 startup business lines of credit

Best for Fast business lines of credit for startups

Headway Capital

Max Amount

$100,000

Min. Credit Score

625

Best for Startup business lines of credit for bad credit

Fundbox

Max Amount

$150,000

Min. Credit Score

600

Best for Unsecured business lines of credit for startups

OnDeck

Max Amount

$100,000

Min. Credit Score

625

Best for Bank startup business lines of credit

Wells Fargo

Max Amount

$50,000

Min. Credit Score

680

Best for Secured business lines of credit for startups

Bank of America

Max Amount

Undisclosed

Min. Credit Score

670

Best for Startup business lines of credit with monthly payments

American Express Business Blueprint™

Max Amount

$250,000

Min. Credit Score

660

Best for Seasonal businesses

U.S. Small Business Administration

Max Amount

$5,000,000

Min. Credit Score

650

I'M INTERESTED IN:

Our pick for

Fast business lines of credit for startups

Headway Capital is a small-business lender specializing in lines of credit that range from $5,000 to $100,000. It offers weekly or monthly repayment options, and once approved, you can receive funding as soon as the next business day.

Headway Capital - Line of credit

Read Review

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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.
Read Review

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Our pick for

Startup business lines of credit for bad credit

Fundbox offers credit lines for startups with six months or more in business; it accepts borrowers with credit scores 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

Unsecured business lines of credit for startups

OnDeck offers business lines of credit for startups with 12 months or more in business, and it 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

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Max Loan Amount
$100,000
Min. credit score
625
Est. APR
35.90-84.90%
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

35.90-84.90%

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.
Read Review

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Our pick for

Bank startup business lines of credit

Wells Fargo’s Small Business Advantage line of credit is available for startups under two years old. There is no annual fee, and line of credit amounts range from $5,000 to $50,000. Any owner of over 20% is required to sign a personal guarantee.

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

Secured business lines of credit for startups

Bank of America offers a cash secured line of credit for businesses in operation for a minimum of six months. Your credit limit is the amount of cash you put down as a security deposit, which is refundable whenever you decide to close your account. This is a good option for businesses looking to build credit and work toward unsecured options.

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

Startup business lines of credit with monthly payments

Some lenders require weekly or even daily payments, which can constrain a new business’s cash flow. But American Express offers credit lines from $2,000 to $250,000 with monthly payments for companies that started their business at least a year ago and have an average monthly revenue of $3,000.

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.

Our pick for

Seasonal businesses

Seasonal CAPLines, one of the four SBA CAPLines, are available to small businesses that have been operating for at least a year and experience seasonal revenue fluctuations. Funds can be used to finance seasonal increases in accounts receivable, inventory costs and labor expenses.

SBA CAPLines of credit

Read Review

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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.
Read Review

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How Much Do You Need?

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How business lines of credit can benefit new businesses

A business line of credit is a flexible funding option for new businesses. It’s revolving, which means that once you pay back the money you have used, that amount is available to you again. There is a limit to the amount of money you can draw and some lenders may also limit the number of draws you take in a given period. Interest is only paid on the balance of the draws you have taken.
For new businesses, a business line of credit may be easier to obtain than a traditional term loan. While traditional business loans are typically less expensive, business lines of credit can be a good short-term funding method to help with cash flow issues, working capital shortages, cyclical sales and other situations common to startups.

🤓 Nerdy Tip

A startup business is usually defined as a business in the early stages of growth. It may refer to businesses that haven’t started operating yet, or businesses that have been operating for a couple of years. For lending purposes, most banks want to see at least two years of operation, so businesses that don’t meet that threshold are often referred to as startups.

Where to get a startup business line of credit for a new business

Online lenders

Online lenders can be good options for newer businesses. Certain online lenders, like Fundbox, offer startup business lines of credit to borrowers with six or more months in business — while others, like OnDeck, will only work with those with 12 or more months in operation.
Many online lenders have streamlined application processes and can provide financing within 24 hours. For example, Headway Capital can provide funds as soon as the next business day for approved borrowers.
Compared to bank lenders, online lenders are less likely to require physical collateral to secure a line of credit, but they may still back the line with a personal guarantee or Uniform Commercial Code lien.
Some online lenders will also work with startups with bad personal credit scores – usually 629 or below by industry standards.

SBA lenders

SBA lines of credit are also available through SBA lenders that partner with the Small Business Administration. Called CAPLines, these lines of credit are designed to meet the cyclical or short-term needs of small businesses as related to seasonal sales, contracts, builder construction or working capital.
Seasonal CAPLines can be an option for a business line of credit for new businesses that have seasonal sales and have been in operation for at least 12 months. The line can be used to supplement cash flow when a business’s sales slow during the offseason or when expenses for labor and supplies increase before the start of a new season.

Traditional banks

Startups usually don’t qualify for business lines of credit offered by banks and credit unions. Traditional lenders generally require that borrowers have two or more years in business for both secured and unsecured business lines of credit. However, there are exceptions. For example, the Wells Fargo Small Business Advantage Line of Credit is available to businesses that are less than two years old and startups operating for a minimum of six months can apply for a Bank of America Cash Secured Line of credit.

Pros and cons of a startup business line of credit

Pros

Cons

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

How to apply for a business line of credit for new businesses

Generally, you can apply for a startup business line of credit from an online lender — although you may be able to find a local or community bank that is willing to lend to newer businesses.
Interest rates, borrowing limits and qualifications can vary by lender. As part of your business loan application, lenders will consider your credit score, annual revenue and time in business — as well as ask you to provide personal and business documentation. Typically, to qualify for a startup business line of credit, it’s helpful to have:
  • Credit score: 600 or higher.
  • Annual revenue: $100,000 or more (Or at least $8,333 per month).
  • Time in business: Six months or more.
You may need to include any of the following in your application to get a business line of credit:
  • Business registration documents.
  • Personal and business bank statements.
  • Personal and business tax returns.
  • Business financial statements, such as a profit and loss statement and balance sheet.
Some online lenders allow you to complete your line of credit application by connecting your financial accounts — like a business checking account or accounting software — to their platform in order to expedite the underwriting process.
Whether you connect your financial accounts or upload financial documents, the more information you can provide that shows your business’s ability to repay the debt, the more likely you are to qualify for a startup line of credit with the best possible business loan rates and terms.

Alternatives to business lines of credit for new businesses

If you can’t qualify for a business line of credit for a new business, here are some situations where you may want to consider alternative startup funding options:
  • You want an option to build your business credit history. Your time in business is usually not considered when applying for startup business credit cards. They can help cover everyday purchases and small to medium-sized startup expenses while you build your business credit history at the same time.
  • You have strong personal finances. If your personal finances are in good shape, you may be able to take out a personal business loan to help fund your new business. You’ll probably be able to borrow more money this way than you could with a business credit card.
  • You have family and friends who support your new business. If you don’t qualify for financing from a financial institution, consider turning to your personal network for funding. Family and friends financing typically involves asking friends and family for a loan or offering equity in your business for their cash investment.
  • You don’t want to take on any additional debt. Startup business grants can be an option for funding your business. However, you’ll face competition for this “free money” and also need to set aside time to find and apply for grants.
  • You have a compelling story or offer a unique product. Crowdfunding for business can be used to fund your startup business. It can be an inexpensive way to raise money and build a base of customers interested in purchasing your products and services online. Also, equity crowdfunding can be used to sell shares to family, friends and others who are interested in investing in your new business.
Last updated on June 11, 2024

Methodology

NerdWallet’s review process evaluates and rates small-business loan products from traditional banks and online lenders. We collect over 30 data points on each lender using company websites and public documents. We may also go through a lender’s initial application flow and reach out to company representatives. NerdWallet writers and editors conduct a full fact check and update annually, but also make updates throughout the year as necessary.
Our star ratings award points to lenders that offer small-business friendly features, including: - Transparency of rates and terms. - Flexible payment options. - Fast funding times. - Accessible customer service. - Reporting of payments to business credit bureaus. - Responsible lending practices.
We weigh these factors based on our assessment of which are the most important to small-business owners and how meaningfully they impact borrowers’ experiences.
NerdWallet does not receive compensation for our star ratings. Read more about our ratings methodology for small-business loans and our editorial guidelines.

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.

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Frequently Asked Questions