Business Line of Credit: Where to Find Flexible Cash

July 27, 2016 Small Business, Small Business Loans
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Why choose a business line of credit over a regular business loan? Both can provide essential capital for small-business owners, but the line of credit has flexibility that a regular business loan just doesn’t have.

With a business line of credit, you can borrow up to a certain limit — say, $100,000 — and pay interest only on the money borrowed. You then draw and repay funds as you wish, as long as you don’t exceed your credit limit. This differs from a traditional business loan, which gives you a lump sum of cash that’s repaid over a fixed period, making it a better option for longer-term investments.

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Business line of credit: Compare all the options

A business line of credit can help your company better manage its cash flow, handle unexpected expenses, buy inventory or fund other short-term business needs. Business lines of credit are also typically unsecured debt, which means you don’t have to provide collateral (assets, such as real estate, that can be sold by the lender if you default). The concept is similar to a business credit card, but getting a cash advance from a credit card is pricier.

Here are some of your best options based on maximum credit limit:

Business line of credit up to $50,000

BlueVine is a good choice for younger companies — you can qualify after just six months in business — that don’t need large lines of credit. Users make weekly repayments on the credit lines over six-month periods, with APRs ranging from 16% to 62%. Borrowers can be approved and funded within 24 hours. The company requires borrowers to make $60,000 in annual revenue and have a credit score of 600.

bluevine
  • Loan amount: Up to $50,000.
  • APR: 16% to 62%.
  • Loan term: Repaid over 6 months.
  • Funding time: As quickly as 24 hours.
  • Read our BlueVine review.
Get started at BlueVine

Before you apply for a BlueVine line of credit, find out whether you meet the minimum qualifications.

  • 600+ personal credit score.
  • 6+ months in business.
  • $60,000+ in annual revenue.
  • Personal guarantee required.
Do I qualify?


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Business line of credit up to $100,000

Kabbage, OnDeck and StreetShares all provide business lines of credit up to $100,000. If you’re looking for the lowest APR, try StreetShares; for the fastest funding, try Kabbage or OnDeck.

Kabbage is also a good choice if you have bad personal credit, as it doesn’t require a minimum credit score for borrowers. But keep in mind that it’s the most expensive option, with APRs between 32% and 108%.

Kabbage
  • Loan amount: $2,000 to $100,000.
  • APR: 32% to 108%.
  • Loan term: 6 or 12 months.
  • Funding time: A few minutes to several days.
  • Read our Kabbage review.
Get started at Kabbage

Before you apply for a Kabbage loan, find out whether you meet the minimum qualifications.

  • No minimum personal credit score required.
  • 1+ year in business.
  • $50,000+ in annual revenue.
  • A business checking or online payment platform required.
Do I qualify?

If you have a credit score of at least 600 and annual revenue of at least $75,000, you might qualify for funding from OnDeck, which has lower APRs than Kabbage. Note: OnDeck charges a $20 monthly maintenance fee, although it’s waived for six months if you draw $5,000 or more within the first five days of opening the account.

OnDeck
  • Loan amount: Up to $100,000.
  • APR: 14% to 40%.
  • Loan term: Repaid weekly.
  • Funding time: As quickly as 24 hours, but typically a few days.
  • Read our OnDeck review.
Get started at OnDeck

Before you apply for an OnDeck line of credit, find out whether you meet the lender’s minimum qualifications.

  • 600+ personal credit score.
  • 9+ months in business.
  • $75,000+ in annual revenue.
  • No bankruptcies in the last two years.
  • Personal guarantee required.
Do I qualify?

StreetShares is the best choice for newer businesses with low annual revenue but decent credit. You’ll need $25,000 in annual revenue to qualify, plus a 600 credit score and at least one year in business — though this requirement drops to six months if you have $100,000 in revenue. An important caveat: StreetShares offers lines of credit up to $100,000, but your maximum credit limit cannot exceed 20% of your annual business revenue. For example, a business with $300,000 in annual revenue could be approved for up to $60,000.

StreetShares-e1459274893272
  • Loan amount: $5,000 to $100,000.
  • APR: 9% to 40%.
  • Loan term: 3 to 36 months.
  • Funding time: 1 to 5 days.
  • Read our StreetShares review.
Get started at StreetShares

Before you apply for a StreetShares line of credit, find out whether you meet the lender’s minimum qualifications.

  • 600+ personal credit score.
  • 1+ year in business.*
  • $25,000+ in annual revenue.
  • No bankruptcies in the past three years.
  • No current tax liens or collections (unless you have proper documentation).

*You need only 6 months in business if you have $100,000+ in revenue.
StreetShares is currently unavailable to borrowers in North Dakota or South Dakota.

Do I qualify?


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Business line of credit up to $500,000

If you regularly buy inventory, Dealstruck could be a good fit. The lender provides lines of credit to finance 100% of your inventory purchases up to $500,000. Here’s how it works: You provide a purchase order for inventory and Dealstruck pays the vendor directly. The vendor ships the inventory to you, and after you sell it, you repay each advance in weekly installments over a period of six months.

To qualify, borrowers need to have a minimum personal credit score of 600 and at least one year in business, and make at least $12,500 per month in revenue.

Dealstruck
  • Loan amount: Up to $500,000.
  • APR: 22% plus prime rate.
  • Loan term: 6 months per draw.
  • Funding time: Average of 10 days.
  • Read our Dealstruck review.
Get started at Dealstruck

Before you apply for a Dealstruck loan, find out whether you meet the lender’s minimum qualifications.

  • 600+ personal credit score.
  • 1+ year in business.
  • $150,000+ in annual revenue.
  • Breaking even or profitable.
  • Personal guarantee and a lien on business assets required.
Do I qualify?


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Business line of credit: Summary of options

Funding optionsGood option for: Do you qualify?Loan amount & APR
bluevine • Newer businesses
• Financing smaller amounts
• 600+ personal credit score
• 6+ months in business
• $60,000+ annual revenue
Up to $50,000
• 16% to 62% APR
kabbage • Bad credit
• Newer businesses
• No minimum credit score
• 1+ year in business
• $50,000+ annual revenue
$2,000 to $100,000
• 32% to 108% APR
Street Shares
Apply now at StreetShares
• Newer businesses
• Financing smaller amounts
• 600+ personal credit score
• 1+ year in business (or 6 months if you already have $100,000+ revenue)
• $25,000+ annual revenue
up to $100,000
• 9% to 40% APR
ondeck • Fast cash
• Businesses with strong revenue
• 600+ personal credit score
• 9+ months in business
• $75,000+ annual revenue
Up to $100,000
• 14% to 40% APR
Dealstruck • Good credit
• Financing inventory purchases
• 600+ personal credit score
• 1+ year in business
• $12,500+ per month revenue
Up to $500,000
• 22% APR plus prime rate

FIND AND COMPARE SMALL-BUSINESS FINANCING

To size up other types of small-business financing, check out NerdWallet’s loan comparison tool. We gauged lender trustworthiness, market scope and user experience, among other factors, and arranged them by categories that include your revenue and how long you’ve been in business.

Compare business loans
This article was updated July 27, 2016. It was originally published Jan. 19, 2016.

Steve Nicastro is a staff writer at NerdWallet, a personal finance website. Email: Steven.N@nerdwallet.com. Twitter: @StevenNicastro.

To get more information about funding options and compare them for your small business, visit NerdWallet’s small-business loans tool. For free, personalized answers to questions about financing your business, visit the Small Business section of NerdWallet’s Ask an Advisor page.

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