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Here are 7 of the best startup business lines of credit
| Lender | NerdWallet Rating▼ | Max loan amount▼ | Min. credit score▼ | Next steps |
|---|---|---|---|---|
OnDeck - Line of credit with Fundera by NerdWallet | 5.0/5 Best for Unsecured startup business lines of credit | $100,000 | 625 | with Fundera by NerdWallet |
Fundbox - Line of credit | 5.0/5 Best for Bad credit | $150,000 | 600 | Read Review |
Headway Capital - Line of credit with Fundera by NerdWallet | 4.7/5 Best for Fast funding | $100,000 | 625 | with Fundera by NerdWallet |
Wells Fargo Small Business Advantage® Line of Credit | 5.0/5 Best for Bank startup business lines of credit | $50,000 | 680 | Read Review |
Bank of America Cash Secured Line of credit | 4.8/5 Best for Secured startup business lines of credit | Undisclosed | 670 | Read Review |
American Express® Business Line of Credit* | 5.0/5 Best for American Express customers | $250,000 | 660 | Read Review |
SBA CAPLines of credit with Fundera by NerdWallet | Best for Seasonal businesses | $5,000,000 | 650 | with Fundera by NerdWallet |
Here are 7 of the best startup business lines of credit
Best for Unsecured startup business lines of credit
Best for Bad credit
Best for Fast funding
Best for Bank startup business lines of credit
Best for Secured startup business lines of credit
Best for American Express customers
Best for Seasonal businesses
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Our pick for
Unsecured startup business lines of credit
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
Max loan amount
$100,000
Min. credit score
625
Est. APR
35.90-84.90%
Pros
- Fast access to working capital.
- Accepts borrowers with a minimum credit score of 625.
- Streamlined application process with minimal documentation required.
- Can be used to build business credit.
Cons
- Not available in North Dakota.
- May require frequent weekly payments.
- Interest rates can be high compared with traditional lenders.
May fund quickly
OnDeck - Line of credit
Max loan amount
$100,000
Min. credit score
625
Est. APR
35.90-84.90%
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 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
- Fast access to working capital.
- Accepts borrowers with a minimum credit score of 625.
- Streamlined application process with minimal documentation required.
- Can be used to build business credit.
Cons
- Not available in North Dakota.
- May require frequent weekly payments.
- Interest rates can be high compared with traditional lenders.
Qualifications:
- Minimum credit score: 625.
- Minimum time in business: 12 months.
- Minimum annual revenue: $100,000.
- No bankruptcies in the past two years.
May fund quickly
Our pick 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%
Pros
- Financing available within one business day after approval.
- Simple application with minimal documentation required.
- Low minimum credit score, time in business and annual revenue requirements.
- No prepayment penalties, account maintenance fees or inactivity fees.
Cons
- Rates are high compared with traditional banks.
- Weekly repayments required over a short term (maximum of 24 weeks).
May fund quickly
Fundbox - Line of credit
Max loan amount
$150,000
Min. credit score
600
Est. APR
36.00-99.00%
Fundbox offers credit lines for startups with six months or more in business; it accepts borrowers with credit scores of 600 or higher.
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.
- Low minimum credit score, time in business and annual revenue requirements.
- No prepayment penalties, account maintenance fees or inactivity fees.
Cons
- Rates are high compared with traditional banks.
- Weekly repayments required over a short term (maximum of 24 weeks).
Qualifications:
- Minimum credit score: 600.
- Minimum time in business: 3 months.
- Minimum annual revenue: $30,000.
May fund quickly
Our pick for
Fast funding
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
Max loan amount
$100,000
Min. credit score
625
Est. APR
35.00-80.00%
Pros
- Flexible qualification requirements.
- No prepayment penalties.
- Funds available by next business day after approval.
Cons
- Most borrowers are subject to a 2% draw fee.
- Not available in all U.S. states.
Headway Capital - Line of credit
Max loan amount
$100,000
Min. credit score
625
Est. APR
35.00-80.00%
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 offers a fast and flexible line of credit for borrowers who may not qualify for more traditional options.
Pros
- Flexible qualification requirements.
- No prepayment penalties.
- Funds available by next business day after approval.
Cons
- Most borrowers are subject to a 2% draw fee.
- Not available in all U.S. states.
Qualifications:
- Minimum credit score: 625.
- Minimum time in business: Six months.
- Minimum annual revenue: $50,000.
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
12.25-13.25%
Pros
- Bank line of credit (backed by the SBA) with competitive interest rates.
- No annual fee or prepayment penalties.
- Available to borrowers with less than two years in business.
- Does not charge an origination fee.
Cons
- May take longer to fund than online lenders.
- Credit lines only available up to $50,000.
- Need a Wells Fargo checking account to access online bill pay.
Wells Fargo Small Business Advantage® Line of Credit
Max loan amount
$50,000
Min. credit score
680
Est. APR
12.25-13.25%
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 offers an unsecured line of credit that’s designed for borrowers with less than two years in business.
Pros
- Bank line of credit (backed by the SBA) with competitive interest rates.
- No annual fee or prepayment penalties.
- Available to borrowers with less than two years in business.
- Does not charge an origination fee.
Cons
- May take longer to fund than online lenders.
- Credit lines only available up to $50,000.
- Need a Wells Fargo checking account to access online bill pay.
Qualifications:
- Minimum credit score: 680.
- Available to borrowers with less than 24 months in business.
- Household personal liquid assets must be less than $500,000.
- Must meet standard SBA loan requirements.
Our pick for
Secured startup business lines of credit
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
Pros
- Available to borrowers with at least six months in business.
- No origination fee.
- Responsible spending can help you graduate to an unsecured credit line.
Cons
- Credit limit is based on the security deposit you provide.
- Must have a Bank of America checking or savings account to apply.
Bank of America Cash Secured Line of credit
Max loan amount
Undisclosed
Min. credit score
670
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’s Cash Secured line of credit can help startups cover working capital needs and establish business credit.
Pros
- Available to borrowers with at least six months in business.
- No origination fee.
- Responsible spending can help you graduate to an unsecured credit line.
Cons
- Credit limit is based on the security deposit you provide.
- Must have a Bank of America checking or savings account to apply.
Qualifications:
- Minimum time in business: Six months.
- Minimum annual revenue: $50,000 per year.
- Bank of America checking or savings account required.
- Minimum deposit of $1,000.
Our pick for
American Express customers
Companies that started their business at least a year ago may be able to qualify for the American Express business line of credit. Existing American Express customers can use their accounts to find out if they prequalify.
American Express® Business Line of Credit*
Max loan amount
$250,000
Min. credit score
660
Pros
- Streamlined application process with minimal paperwork.
- Financing from $2,000 to $250,000 available.
- Accepts borrowers with a minimum FICO score of at least 660 at the time of application.
- Monthly repayment schedule (as opposed to daily or weekly).
- No prepayment penalties, account maintenance fees or draw fees.
Cons
- Must have online checking or PayPal account to verify cash flow.
- Complex monthly fee structure makes it difficult to compare costs to other lenders.
American Express® Business Line of Credit*
Max loan amount
$250,000
Min. credit score
660
Companies that started their business at least a year ago may be able to qualify for the American Express business line of credit. Existing American Express customers can use their accounts to find out if they prequalify.
The American Express® Business Line of Credit is a good option for business owners with fair credit who want access to working capital.
Pros
- Streamlined application process with minimal paperwork.
- Financing from $2,000 to $250,000 available.
- Accepts borrowers with a minimum FICO score of at least 660 at the time of application.
- Monthly repayment schedule (as opposed to daily or weekly).
- No prepayment penalties, account maintenance fees or draw fees.
Cons
- Must have online checking or PayPal account to verify cash flow.
- Complex monthly fee structure makes it difficult to compare costs to other lenders.
Qualifications:
- Minimum FICO score of at least 660 at the time of application. The required FICO score may be higher based on your relationship with American Express, credit history, and other factors.
- Must have started your business at least a year ago.
- Average monthly revenue of at least $3,000.
- All businesses are unique and are subject to approval and review.
- American Express® Business Line of Credit offers two loan types, installment loans and single repayment loans for eligible borrowers. All loan term types, loan term lengths, and pricing are subject to eligibility requirements, application, and final approval. This article contains general information about the American Express® Business Line of Credit installment loan type only.
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
Max loan amount
$5,000,000
Min. credit score
650
Est. APR
10.75-14.25%
Pros
- Line of credit options for seasonal, working capital, building and contracting needs.
- Large maximum borrowing amounts.
- Competitive interest rates and repayment terms.
Cons
- Typically requires good credit and multiple years in business.
- Slow to fund.
- Collateral and/or down payment may be required.
SBA CAPLines of credit
Max loan amount
$5,000,000
Min. credit score
650
Est. APR
10.75-14.25%
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.
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.
Pros
- Line of credit options for seasonal, working capital, building and contracting needs.
- Large maximum borrowing amounts.
- Competitive interest rates and repayment terms.
Cons
- Typically requires good credit and multiple years in business.
- Slow to fund.
- Collateral and/or down payment may be required.
Qualifications:
- For-profit U.S. business.
- Unable to access credit on reasonable terms from nongovernment sources.
- Financial qualifications determined by individual lender.
How to compare startup business lines of credit
The best startup business line of credit will likely be the most affordable one you can qualify for that meets your needs. As you compare your options, consider the following factors:
- Borrowing limits. Some lenders may offer lines of credit up to $250,000, whereas others will only offer up to $50,000. You’ll want to know how much funding you need when looking at your options. Keep in mind that larger funding amounts may be more difficult to qualify for than smaller ones.
- Repayment schedule. Startup business lines of credit can have daily, weekly or monthly repayments. Frequent payments can be harder to manage when you’re just starting out and cash flow is tight. Make sure that you can afford any potential payments.
- Interest rates. Rates on business lines of credit range anywhere from 10% to 99%. To qualify for the best rates, it’s helpful to have good credit and strong finances.
- Fees. Ask lenders to provide a breakdown of their line of credit fees. They may charge additional fees such as draw fees, monthly maintenance fees or origination fees. Make sure you consider these fees when determining the overall cost of a line of credit.
- Collateral. Although not all startup business lines of credit require collateral, providing collateral (or offering more than needed) may help you qualify, especially if some of your credentials aren’t where you’d like them.
- Funding speed. Online lenders can typically provide the fastest access to funds, although they’ll charge higher interest rates. If you can wait for bank or SBA funding (and can qualify), you may be able to save on interest costs.
- Lender reputation. It can be useful to read online reviews to get a better sense of what it’s like working with a particular small-business lender. Be wary of companies that try to rush you through the underwriting process or aren’t transparent about their rates and fees.
Use our business line of credit calculator to compare potential costs and payments on different offers:
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.
Monthly payment
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Total payments
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Total interest paid
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Pros and cons of a startup business line of credit
Pros
✅ Flexible form of financing.
A business line of credit is one of the most flexible forms of business funding. You can use a line of credit for a range of short-term purposes, including managing cash flow, covering emergencies or taking advantage of unexpected opportunities. Flexibility makes this financing solution well-suited for the unpredictability of running a startup business.
✅ Access to fast cash.
You can draw funds from your credit line and have access to cash quickly — when you actually need it — and only pay interest on the funds you draw. Plus, when you repay what you’ve borrowed, you can continue to draw on the line.
✅ Build business credit.
A business line of credit for new businesses can build a positive business credit history, which can help you to obtain future credit accounts and loans. Making your payments on time and keeping your credit utilization ratio at or below 30% can help your business credit — as long as your lender reports responsible spending to the business credit bureaus.
Cons
❌ Can be expensive.
Annual percentage rates on some startup business lines of credit can run high, as newer businesses generally pose a greater risk to lenders compared to more established businesses. To qualify for the best possible rates, it can help to show solid business financials and strong credit history — and in some cases, secure your line of credit with collateral.
❌ Limited options.
Not all lenders offer startup business lines of credit, and there can be limitations for the ones that do. Plus, getting a business line of credit for a startup without revenue can be even more challenging. Compared to credit lines available for more established businesses, for example, business lines of credit for new businesses may have smaller borrowing limits and shorter repayment terms.
❌ Personal financial risk.
Even if you can qualify for a startup business line of credit, it’s important to make sure you can afford to take on potential debt. Finances can be tight when running a startup and you need to be able to repay borrowed funds if your business slows — or even fails. If you can’t repay your line of credit, it will likely impact your personal credit and finances. Most lenders will require you to sign a personal guarantee so that you’re individually responsible for paying back your debt, even if your business fails.
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.
There are exceptions, however. The Wells Fargo Small Business Advantage Line of Credit, for example, is available to businesses that are less than two years old. Similarly, startups operating for a minimum of six months can apply for a Bank of America Cash Secured Line of credit.
Alternatives to lines of credit for new businesses
If you can’t qualify for a business line of credit for your new business, here are some alternative options for startup funding:
- 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. 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.
Frequently asked questions
Yes, once you’ve been in business for at least six to 12 months, your startup may be able to qualify for a business line of credit. If your business is newer than that, you should consider other forms of financing, like business credit cards.
Typically, no. In general, you need several months’ worth of revenue history to get a business line of credit. Most lenders include a minimum monthly or annual revenue requirement in their loan applications. If your business has steady but low revenue, consider the American Express® Business Line of Credit, which is available to businesses with about $3,000 in average monthly revenue.
It depends. Startups will typically need to be at least six to 12 months old and have around $8,000 per month in revenue to get a business line of credit. If you need credit as a brand new business, consider applying for a startup business credit card instead.
Many lenders offer business lines of credit that are unsecured, though you’ll usually have to sign a personal guarantee, which is a promise that you will personally repay the lender if your business is unable to. Lenders may also place a UCC lien on your business, allowing them to seize your business assets if you default.
Last updated on July 31, 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.
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