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

Startup business lines of credit can help new companies manage cash flow or cover short-term expenses. Interest rates may run high, however.
Written by Randa Kriss
Edited by Sally Lauckner
Last updated on October 20, 2022

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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.

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 4 startup business line of credit

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Max loan amount
Min. credit score
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Kabbage - Line of credit

on Kabbage's website

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

on Kabbage's website

Fundbox - Line of credit

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Best for Unsecured business lines of credit for startups$150,000600

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Bluevine - Line of credit

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Best for Startup business lines of credit for bad credit$250,000625

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OnDeck - Line of credit

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Best for Startup business lines of credit for building business credit$100,000625

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Here are 4 startup business line of credit

Best for Startup business lines of credit with monthly payments

Kabbage

Max Amount

$250,000

Min. Credit Score

640

Best for Unsecured business lines of credit for startups

Fundbox

Max Amount

$150,000

Min. Credit Score

600

Best for Startup business lines of credit for bad credit

Bluevine

Max Amount

$250,000

Min. Credit Score

625

Best for Startup business lines of credit for building business credit

OnDeck

Max Amount

$100,000

Min. Credit Score

625

Our pick for

Startup business lines of credit with monthly payments

Some lenders require weekly or even daily payments, which can cramp a new business’s cash flow. But Kabbage offers credit lines up to $250,000 with monthly payments for startups with one year or more in business.

Kabbage - Line of credit

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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

Unsecured business lines of credit for startups

Fundbox offers business lines of credit for startups with six months or more in business, and it doesn’t require physical collateral. Borrowers are subject to UCC blanket liens, however, and may be required to sign a personal guarantee.

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.
May fund quickly

Our pick for

Startup business lines of credit for bad credit

Bluevine offers credit lines for startups with six months or more in business; it accepts borrowers with credit scores of 625 or higher.

Bluevine - Line of credit

Read Review

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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

Our pick for

Startup business lines of credit for building business credit

OnDeck offers fast lines of credit for startups with one year or more in business. By making timely payments, you can use an OnDeck line of credit to build your business credit history.

OnDeck - Line of credit

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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

How Much Do You Need?

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Where to get a startup business line of credit

Although banks and credit unions typically offer business lines of credit with the most competitive rates and terms, startups usually don’t qualify. Traditional lenders generally require that borrowers have two or more years in business for both secured and unsecured business lines of credit.
Online lenders are more flexible for new businesses. Certain online lenders, like Fundbox and Bluevine, offer startup business lines of credit to borrowers with six or more months in business — while others, like Kabbage and 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. Compared to bank lenders, online lenders are less likely to require physical collateral to back a line of credit, but they may still secure the line with a personal guarantee or Uniform Commercial Code lien.
Some online lenders will work with startups with bad credit (FICO score of 629 or below).

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. Spending responsibly with a business line of credit may allow you to build a positive business credit history, which can help you 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 with collateral.
  • Limited options. Not all lenders offer startup business lines of credit, and there can be limitations for the ones that do. Compared to credit lines available to more established businesses, for example, business lines of credit for startups 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.

How to apply for a startup business line of credit

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. 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.
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.
You may need to include any of the following:
  • 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 business line of credit with the best possible rates and terms.

Other startup financing options

If you can’t qualify for a startup business line of credit, consider these financing options:
  • Startup business credit cards. Your time in business is usually not considered when applying for business credit cards. They can help cover everyday purchases and small to medium-sized startup expenses while you build your business.
  • Personal business loans. If your personal finances are in good shape, you may be able to take out a personal 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.
  • Friends, family and crowdfunding. If you don’t want to take on debt from a financial institution, consider turning to your personal network for investment — whether that’s by asking friends and family for funding directly or through a crowdfunding campaign.

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 20, 2022

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