Compare Business Credit Lines

  • Lines of credit are available for businesses that need an ongoing source of additional capital
  • You can compare a selection of UK business credit line providers in the table below
  • Compare available loan amounts, terms and features to find a suitable lender

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Information written by Brean Horne Last updated on 04 July 2022.

Business finances change throughout the year and sometimes unexpected expenses come up. A business line of credit can help companies access funding when they need it. Businesses are given a credit limit for a set period of time and can withdraw funds for multiple purchases or business expenses.

Business credit lines can be used for anything from supplementing wages and cash flow to making office renovations and restocking inventory.

Similar to personal loans and mortgages, there are two main categories for credit lines; secured and unsecured. Secured credit lines allow companies to use personal assets as collateral against the credit line. So if they fail to keep up with repayments, a lender can take the asset.

Unsecured credit lines don’t require companies to use collateral against the loan. Unsecured credit lines tend to be more expensive and have lower credit limits. This is because there’s a higher risk of the lender losing money if the company is unable to repay what it borrows

Business credit lines can be a useful source of funds for companies that need to borrow money several times throughout the year. For example, if you need cash to expand the business or the financial forecast predicts cash-flow shortfalls.

Use our table to compare business lines of credit and find the one that is most suitable for you.

Or read on below to find out about the different lines of credit on offer, their features and how to apply for one.

What is a credit line?

A business credit line, also known as a ‘line of credit’, allows companies to borrow money up to an agreed limit. For example, it can take a lump sum and draw down smaller amounts from the pot when needed.

Business lines of credit fall into two categories:

  • Secured credit lines: a secured business line of credit requires the borrower to use their assets as collateral against the loan. The lender will take the collateral if the business fails to pay back what they borrow.
  • Unsecured credit lines: an unsecured business line of credit doesn’t require the borrower to use their assets as collateral against the loan. Unsecured lines of credit tend to have lower credit limits and higher rates of interest.

How does a business line of credit work in the UK?

A business line of credit offers flexible repayments, unlike a business loan or business credit card. When you borrow money with a business line of credit, you and the lender will agree on a date when it must be repaid.

The repayments are not fixed into monthly instalments, but you must repay by the date specified in your agreement. That means that you could pay off your line of credit early without having to pay early repayment charges.

As well as this, you only have to pay interest on the money that you draw down.

For example, if you have a business line of credit from a lender for £20,000 and you only draw down £5,000 to restock inventory, you will only be charged interest on the £5,000.

There are two types of credit line agreements for businesses:

  • Revolving business credit lines: allow you to keep drawing down money up to your credit limit and once it’s repaid your balance tops up again and you can borrow more money from the same account.
  • Non-revolving business credit lines: allows you to draw down money up to your credit limit but once you’ve used your quota, you can’t have anymore – even when you’ve paid it back.

Common uses for a business line of credit include financing:

  • new assets or equipment
  • business expansion
  • start up costs
  • cash-flow problems

What are the advantages of a business line of credit?

Business credit lines can open up new funding opportunities for companies. The benefits of a business credit line include:

  • Flexible repayments: A business line of credit can be paid off early without incurring any early repayment fees.
  • Speedy application: You can apply for a business line of credit quickly online and some lenders will decide within 24 hours.
  • Improve cash flow: A line of credit can help to keep your business running if you have a short-term cash flow issue such as invoices taking longer to be paid.

What are the disadvantages of a business line of credit?

There are some disadvantages of a business line of credit that are worth considering before applying. These include:

  • Fixed commitment period: Lines of credit are open for an agreed period of time only, after which the account will be closed. You will have to reapply if you need to borrow more money, even if you haven’t used any funds.
  • Higher interest rates: Business credit lines may have more expensive interest rates than loans or credit cards.
  • Short-term financing: Business lines of credit are short-term funding solutions, so you may need to consider alternative forms of business finance if your business needs long-term funding.

Is a credit line a good idea for my business?

A business line of credit may be a useful source of finance if your company needs to borrow money multiple times during the year. For example, if you forecast that your business may have cash flow shortfalls or need funds to help it expand.

Is my business eligible for a line of credit?

The eligibility criteria for a business line of credit may vary between lenders, so it is important to check their terms and conditions before applying. Some lenders may require your business to be running for a certain amount of time or have a minimum sales threshold.

How to open up a business line of credit

Most lenders let you open a business line of credit online and will ask for the following information when you apply for an account:

  • Funding amount: how much money you need to borrow and for how long.
  • Business details: the name, legal status and contact details of your business.
  • Business finances: including turnover, invoices and bank statements.
  • Contact details: your name, address and contact information.

How much can I borrow?

Lenders may offer a business credit line of anywhere between £1,000 and £10 million. The amount your business can borrow will vary depending on the lender and your financial circumstances. Each lender will use your application to decide how much to lend your business and for what period of time.

What interest rate or APR do I pay?

The interest rate, or APR, that you pay will vary depending on the lender and your credit agreement. Overall, interest rates for a line of credit tend to be higher than interest rates for a business loan or credit card.

How long does it take to get a line of credit approved?

You can apply for a business line of credit within a matter of minutes and some lenders make a decision about your application within 24 hours.

How is a business line of credit different from a business credit card?

A business line of credit tends to be a secured type of borrowing, unlike a business credit card which is a form of unsecured lending. However, unsecured borrowing may be possible with a business line of credit, but this is less common.

Secured borrowing is when you have to use a physical asset, such as property, down as collateral as part of your credit agreement.

Unsecured borrowing doesn’t require an asset but tends to come with higher interest rates.

Common uses for a business line of credit

A business line of credit may be useful if your company experiences seasonal income. It could help cover costs such as payroll or overheads when there is a dip in your income.

Business lines of credit are also commonly used to purchase inventory.

What’s the alternative to a credit line for businesses?

Alternatives to a credit line for business include:

Alternatives to a credit line for business include:

  • Asset finance: Helps businesses get funding for a specific asset, such as office supplies, new machinery or vehicles.
  • Business loans: Secured and unsecured business loans allow companies to borrow lump sums and make fixed repayments including interest.
  • Business credit cards: Offer businesses a fixed credit limit that can be used for everyday spending and large purchases. Most credit card balances must be paid off in full each month or will incur interest.
  • Business overdrafts: Some business bank accounts come with an overdraft that can be used for day-to-day business expenses.
  • Government funding: Eligible companies can apply for government grants to secure additional funding.

» MORE: What alternative finance options are there?

How does Nerdwallet’s business credit line comparison work?

Our business credit line comparison table above shows the features and services offered by each lender.

You can use our account breakdown to compare each credit line. You will be able to see available amounts, minimum turnover and available terms and decide which one could help you manage your company finances.

Business Credit Lines FAQ

Does a business line of credit affect your credit score?

When you apply for a business line of credit, most lenders will do a soft credit check to verify the identity of your business, which won’t affect your credit score. Some lenders may request a hard credit check when you are negotiating the credit agreement, which will leave a visible mark on your business credit report and may affect your credit score.

What are draw and repayment periods?

Draw and repayment periods are the durations of time that you can draw down money from your line of credit and repay what you use. During a draw period, you will be using money from your line of credit. During a repayment period, you will be expected to repay the interest and principal of the loan.

Do credit lines have closing costs?

Most of the time there are no charges to close your business credit line account so long as you keep up with the repayments. Some credit lines will have closing costs and It's important to factor these fees into your considerations when you are evaluating which lenders and financial products are right for you. If there are no closing costs, once your agreement ends, your account will close automatically without any fees. You may have to pay additional fees

How to build/increase your business line of credit?

Some providers let you apply for a credit line increase through your online account. They will usually give you a decision within a few hours of your application. It is important to check that a lender offers the opportunity to increase your loan before applying for a line of credit if you think you will need to borrow more money.

How is a business credit line repaid?

If you borrow money using a business line of credit, you and the lender will agree on a date when it must be repaid. The repayments are not set monthly instalments, but you must repay by the date specified in your agreement. That means that you could pay off your line of credit early without having to pay early repayment charges. It is always worth checking before entering into any agreement, to see if your lender has any early repayment charges.

Can I get ongoing funding for my business?

Some lenders offer revolving credit lines that allow you to draw down money from your credit limit and, once it has been repaid, your balance tops up and you can borrow more money from the same account.

Are there risks of over-using a line of credit?

Overusing a business line of credit could cause your company to become stuck in a cycle of borrowing.

Business lines of credit usually charge higher rates of interest, which can be expensive for long-term borrowing too.

About the author:

Brean is a personal finance writer at NerdWallet. She covers a range of financial topics and has written for consumer titles including Which?, Moneywise and The Motley Fool. Read more

Compare Business Credit Lines

2 products found
  • Funding Xchange Credit Lines logo
    Broker

    Funding Xchange Credit Lines

    • Discover personalised flexible Credit Line offers in just 3 minutes
    • Get access to a revolving line of credit that you can draw down from when you need it
    • It can be used to supplement cash flow and help expand your business
    • Minimum Turnover
      £100,000 p.a.
    • Available Amounts
      £1,000 to £250,000
    • Available Terms
      1 month to 5 years
  • iwoca Credit Lines logo

    iwoca Credit Lines

    • Flexible credit line facilities of up to £500,000
    • Repay early with no fees
    • Application decisions in one working day
    • Minimum Turnover
      £50,000 p.a.
    • Available Amounts
      £1,000 to £500,000
    • Available Terms
      up to 24 months
  • Suppliers that don't offer Business Credit Lines but may offer suitable alternatives:

    • Nationwide Finance Business Finance logo

      Nationwide Finance Business Finance

      • Nationwide Finance help 35,000 businesses get finance each year
      • Direct funder - not a broker
      • Same day decision, funds within 24 hours
      • Minimum Turnover
        No minimum
      • Available Amounts
        £8,000 to £500,000
      • Available Terms
        1 to 5 years
    • Funding Circle logo

      Funding Circle

      • Your business must have a minimum of 2 years’ trading history
      • A leading UK platform for small business loans
      • Simple online application and decisions in as little as 5 hours
      • Rates from 4.9% per year - No early settlement fees
      • Minimum Turnover
        £16,700 p.a.
      • Available Amounts
        £10,000 to £500,000
      • Available Terms
        2 to 6 years
    • Tide logo
      Broker

      Tide

      • Tide works with a number of partners who offer a range of flexible business funding solutions
      • They will run pre-eligibility checks, without affecting your credit score, to show you credit options tailored to your business
      • Connect your business bank account in minutes to see your credit options and receive a £75 Uber/Uber Eats voucher (Terms & Conditions apply)
      • Minimum Turnover
        Varies
      • Available Amounts
        £500 to £15,000,000
      • Available Terms
        1 month to 6 years
    • Cubefunder logo

      Cubefunder

      • Only available to Limited Companies in England and Wales with 3+ months' trading
      • Fast and Flexible funding from £5,000 - £100,000 for Limited Companies within England and Wales
      • No penalties for Late payments or Early repayment
      • Apply and receive funds within 48 hours
      • Minimum Turnover
        £50,000 p.a.
      • Available Amounts
        £5,000 to £100,000
      • Available Terms
        3 months to 1 year
    • 365 Business Finance logo

      365 Business Finance

      • Your business must process credit and debit card transactions to apply for this product
      • A flexible business funding alternative
      • Cash advanced against card transactions
      • Pay back an affordable % of your card transactions
      • Minimum Turnover
        £10,000+ card transactions per month
      • Available Amounts
        £10,000 to £300,000
      • Available Terms
        4 to 18 months
    • Fleximize logo

      Fleximize

      • Industry-leading flexibility - top-ups, repayment holidays, penalty-free early repayment, no set-up fees
      • Interest charged on reducing balance, not total loan amount - repay early and only pay for the time you had the loan
      • Apply online in five minutes, typically get a decision in 24 to 48 hours, receive funds the same day
      • Minimum Turnover
        £60,000 p.a.
      • Available Amounts
        £5,000 to £500,000
      • Available Terms
        3 months to 4 years
    • Swoop Funding logo
      Broker

      Swoop Funding

      • Your business must have a minimum of 1 years' trading history
      • Simple, secure and speedy search of 1,000 funding providers without affecting your credit rating
      • Free access every type of finance including the Recovery Loan Scheme
      • Online management allows you to find funding opportunities and track applications
      • Minimum Turnover
        £100,000 p.a.
      • Available Amounts
        £1,000 to £10,000,000
      • Available Terms
        3 months to 6 years
    • Capify logo

      Capify

      • Your business must have a minimum of 1 years trading history. No sole traders.
      • Capify loans are paid back in very small automated regular payment; either daily or weekly
      • A fast and easy business funding alternative for SMEs
      • Funds can be used for any business purpose, from managing cashflow through to improving technology
      • Minimum Turnover
        £120,000 p.a.
      • Available Amounts
        £5,000 to £500,000
      • Available Terms
        3 to 18 months
    • Lombard logo

      Lombard

      • Lombard offers a comprehensive range of asset finance solutions - specialising in business car finance
      • A simple finance solution with a credit decision in 24 hours for transactions up to £150,000
      • Security, guarantees or indemnities may be required. Product fees may apply. Finance is subject to status and is only available for business purposes
      • Minimum Turnover
        No minimum
      • Available Amounts
        £5,000 to £250,000
      • Available Terms
        1 to 7 years

Our comparison service features a selection of providers from whom we receive commission. This table is initially ordered according to our commercial arrangements. You can use the options above the table to order it according to various criteria.

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