Finimpact

Best Small Business Lines of Credit

If your business is short on cash, a business line of credit might help. Twenty-three percent of small business owners report that cash flow is their biggest challenge. The six lenders below could be a great place to start your search for working capital.

Business line of credit
Michelle Lambright Black
Credit Expert and Financial Writer

A business line of credit (LOC) is a flexible, short-term financing option. As such, it could help businesses that are short on working capital and need to cover payroll, inventory purchases, emergency expenses, growth opportunities, and more. However, a business LOC typically isn’t ideal for long-term financing needs, like equipment or real estate purchases.

Our team of financial experts reviewed and ranked the top online lenders to help you get funded. Read on to discover our choices for the top six business lines of credit.

Our Top Picks for Best Business Lines of Credit

Fundbox review
  • No monthly fees or prepayment penalties
  • Same-day or next-day funding
  • Best for business lines of credit
Credit Score
Min. Credit Score 600+
Loan Amount
Loan Amount $5K - $150K
repayment
Loan Repayment 6-12 months
bluevine
  • Quick and simple application
  • Competitive interest rates
  • Available to customers with relatively low credit scores
Credit Score
Min. Credit Score 600+
Loan Amount
Loan Amount $5K-$250K
loan repayment
Loan Repayment 6-12 months
credibly
  • Simple application process
  • As soon as same day funding
  • Open to high-risk industries
Credit Score
Min. Credit Score 500+
Loan Amount
Loan Amount $5K-$400K
Loan Repayment
Loan Repayment 6-18 months

How to Choose the Best Business Lines of Credit

When you’re choosing a line of credit for your business, there are numerous details you’ll want to review. Below are some of the key factors our experts considered to rank the top lenders in this guide.

  • Qualification Process: Can your business satisfy a lender’s borrowing requirements (e.g., minimum credit score, annual revenue, time in business, etc.)? If not, that business line of credit is probably a poor fit for you.
  • Interest Rates and Fees: Consider both interest rates and fees to get a clear picture of the cost of borrowing. Note that some LOCs might feature usage fees, origination fees, or maintenance fees that could offset the perceived savings of a lower rate.
  • Other Loan Features: Details like the maximum credit line available, repayment terms (i.e., weekly vs. monthly), and more matter when you’re shopping for a business LOC.
  • Application Process: Need fast access to credit? Pay attention to each lender’s application process and funding speed. Online lenders often offer faster funding. With SBA lenders or traditional financial institutions, however, you might have to wait weeks or even months for funding.
  • Customer Support: The level of customer support a lender offers is another important detail to consider. Can you talk to a live representative? Are the business hours convenient? Answers to such questions matter when choosing the best business LOC for your company.
  • Online User Reviews: No lender has a perfect track record in terms of customer satisfaction. Yet independent review sites like Trustpilot can help you spot red flags and discover whether the lender has a better or worse reputation than average.
  • Perks and Bonuses: Some business LOCs come with special offerings that could benefit you. Payment flexibility, advanced or user-friendly technology, and transparent advertising are a few examples of perks that you might discover.

Best Business Lines of Credit in 2022—Full Overview

Check out the six lenders below that offer the best business lines of credit in 2022.

1. Fundbox: Best for Low Interest Rates

Fundbox offers business lines of credit with competitive interest rates starting at 4.66%. The online lender extends business lines of credit up to $150,000 to qualified borrowers with fast funding as soon as the next business day after approval. Furthermore, borrowers only need a fair personal credit score (600 FICO Score) to qualify for a business LOC with Fundbox. However, the lender’s repayment terms may be tighter than you encounter elsewhere.

Pros
Fast funds disbursement
Competitive interest rates
No prepayment penalty
Available to newer businesses (6+ months)
May qualify with a fair credit score
Cons
Short repayment terms (12 or 24 weeks)
Weekly payments by automatic debit
Personal guarantee may be required

fundbox review

Fundbox borrowers may qualify for a line of credit as high as $150,000 and an APR between 4.66% to 8.99%. The lender requires weekly payments with an automatic debit from your business checking account, and the repayment term is a short 12- or 24-week time frame. Small business borrowers need a FICO Score® of 600, at least $100,000 in annual revenue, and ideally 6 months or more in business.

Main Features

Min. Credit ScoreMin. Time in BusinessMin. Annual RevenueLoan AmountInterest Rate
6006 Months$100,000Up to $150,0004.66% - 8.99%

The Bottom Line

A business line of credit from Fundbox may be a good fit for well-qualified borrowers looking for competitive interest rates.

Try FundBox

2. BlueVine: Best for Startups

BlueVine has a business line of credit with the potential for high credit limits (up to $250,000) and low interest rates (as low as 4.8%) for well-qualified borrowers. Not only can BlueVine’s terms compete with traditional financial institutions, it also offers a streamlined application process common to online lenders.

Pros
Competitive interest rates
Fair credit score may qualify
Monthly and weekly payment options
Cons
Higher revenue requirements
Not available nationwide

bluevine review

Your business will need to be in operation for at least six months to qualify for a LOC from BlueVine—a time requirement that’s half of what some other lenders require. However, the lender also has a minimum monthly revenue requirement of $10,000 which could be difficult for some to satisfy. You must repay each draw within six or 12 months. But the lender offers both fixed weekly and monthly payment options where many lenders in the space require weekly payments.

Main Features

Min. Credit ScoreMin. Time in BusinessMin. Annual RevenueLoan AmountInterest Rate
6006 Months$120,000 ($10,000 per Month)Up to $250,000Starts at 4.8%

The Bottom Line

A business line of credit from BlueVine may be a good fit for companies with limited time in business and fair personal credit scores. Well-qualified borrowers looking for low interest rates or higher credit limits may be interested in working with BlueVine as well.

Try Bluevine

3. Credibly: Best for Bad Credit

Credibly offers unsecured and secured business lines of credit with low potential interest rates starting at 4.8%. Well-qualified borrowers may receive flexible credit lines as high as $250,000. In addition to competitive APRs and high maximum borrowing potential, Credibly also has solutions for borrowers with bad credit. The online lender accepts applicants with personal FICO Scores as low as 560. But borrowers with lower credit scores or other increased borrowing risk factors shouldn’t expect to receive the lender’s lowest interest rates.

Pros
Low minimum credit score requirement (560)
Lenient qualification standards
Same-day funding
Cons
Origination fee may apply
Difficult to increase credit limit

credibly review

Credibly gives would-be borrowers the chance to prequalify online for a business line of credit. Thanks to the online lender’s more forgiving qualification requirements (e.g., 560 FICO Score, $50,000 in annual revenue, and six months or more in business), you may have an easier time opening a business line of credit from Credibly than you would elsewhere.

Main Features

Min. Credit ScoreMin. Time in BusinessMin. Annual RevenueLoan AmountInterest Rate
560 6 Months$50,000$250,0004.8%

The Bottom Line

Borrowers with poor personal credit or revenue limitations may be interested in Credibly’s non-traditional business lines of credit. Yet the low potential interest rates and high maximum credit lines mean that this funding source may also appeal to borrowers with good credit.

Try Credibly

4. Kabbage: Best for American Express Fans

A business line of credit from Kabbage may be a solid choice for small business owners who are fans of American Express. American Express acquired the small business lender in 2020. Qualified borrowers with at least 12 months in business may enjoy a credit line between $1,000 and $150,000. You’ll repay each draw as an individual installment loan, and the monthly fee you pay can vary between 2% to 27%—based on creditworthiness, repayment terms, and more. (Note: Kabbage charges a monthly fee rather than an interest rate. These fees should not be confused with an APR, which would be higher.)

Pros
May qualify with bad credit
No prepayment penalty
Earn $150 bonus upon approval
Cons
Personal guarantee required
Complicated monthly fee structure
Fees can be high

kabbage review

Kabbage differs from other lenders in several ways. The lender treats each draw from your line of credit as an individual installment loan. You must repay each loan in either 6, 12, or 18 months, depending on the amount you borrow.

The lender is also unique in the way it charges its customers. Instead of an interest rate, Kabbage charges a monthly fee each month you owe an outstanding balance. The lender provides a comparison tool in your loan agreement to show how its monthly fees would compare to a standard APR.

Main Features

Min. Credit ScoreMin. Time in BusinessMin. Annual RevenueLoan AmountInterest Rate
None12 MonthsNot DisclosedUp to $150,000Not Disclosed

The Bottom Line

The secret to acquiring a small business loan that meets the needs of your business is to find a loan company that offers you acceptable interest rates and terms. In this article, our experts have outlined the pros and cons of the best small business loans currently on the market. Now, you simply have to decide which loan is right for your business, and apply. It’s that easy!

Try Kabbage

5. Rapid Finance: Best for Alternative Financing

Rapid Finance offers small business lines of credit of up to $250,000 to qualified businesses. In addition to being a direct lender, the company also works with dozens of lending partners which can give borrowers more opportunities to qualify for financing. If you open a line of credit, you may be able to access your credit line within hours after approval.

Pros
Fast funding speed
Multiple funding options
Cons
Pricing isn’t transparent
May be expensive
Daily or weekly payments may apply

rapid finance line of credit

Credit limits with Rapid Finance range between $5,000 to $250,000 for business lines of credit. The repayment terms the lender offers can vary between 3 to 13 months and come in the form of automatic drafts—daily, weekly, or monthly. However, your repayment term may reset each time you take a new draw against your credit line.

The Bottom Line

Businesses who aren’t sure what type of financing they want may enjoy the added one-on-one guidance from a Rapid Finance loan representative. (Just keep in mind that these representatives likely work on some form of commission.) If the cost of borrowing is your main concern, you may be able to find a more affordable business line of credit elsewhere.

Try Rapid Finance

6. OnDeck: Best for Fast Funding

Small business lines of credit from OnDeck feature a simple application process, same-day funding, and business credit building potential. If you qualify for a business LOC, your credit limit will range between $6,000 and $100,000. Despite the lender’s lenient qualification standards, interest rates start at 35.9% and the average APR for borrowers is 47.14%. OnDeck also charges both origination and monthly maintenance fees.

Pros
Fast funding
May qualify with fair credit
Transparent pricing
Cons
Average APR is 47.14%
Personal guarantee required
Mulitple fees apply

ondeck lines of credit

You may be able to open an OnDeck business LOC with at least one year in business, $100,000 in annual revenue, and a personal FICO Score as low as 600. The lender also distrubtes funding as soon as the same day you open a business line of credit. Customers can continue to access their credit line 24/7—receiving funds from future draws any time.

Repayment terms with OnDeck are 12 months maximum. But the term resets after each new draw. The lender also requires automatic monthly payments in the form of a business checking account debit.

Features

Min. Credit ScoreMin. Time in BusinessMin. Annual RevenueLoan AmountInterest Rate
6001 Year$100,000$6,000 - $100,000Starts at 35.9%

The Bottom Line

Small businesses that need same-day access to funding may enjoy the speed of a business line of credit from OnDeck. Yet due to high interest rates and additional fees, it’s important to consider the cost of borrowing and make sure that the funding solution fits your budget.

Try OnDeck

Best Business Lines of Credit - Main Features

There are some excellent options on the market. To save you time and to provide you with some clarity, we’ve researched five of the best lenders and summarized them for you in the table below.

Company

Min. Credit Score

Min. Time in Business

Min. Annual Revenue

Loan Amount

Interest Rate

Fundbox

600

6 Months

$100,000

Up to $150,000

4.66% - 8.99%

BlueVine

600

6 Months

$120,000 ($10,000 per Month)

Up to $250,000

Starts at 4.8%

Credibly

560

6 Months

$50,000

$250,000

4.8%

Kabbage

Not Disclosed

12 Months

Not Disclosed

Up to $150,000

Not Disclosed

OnDeck

600

1 Year

$100,000

$6,000 - $100,000

Starts at 35.9%


What is a Small Business Line of Credit?

A small business line of credit is a flexible form of financing that lets your company borrow multiple times against the same credit line. As you repay all or a portion of the money you borrow (plus interest and fees), you should have access to make future draws from the same lender without submitting a new application for financing.

How Does a Business Line of Credit Work?

A business line of credit enables a business owner/borrower to withdraw funds whenever needed. The business LOC also allows the borrower to keep withdrawing funds, as long as that borrower keeps current on loan repayments and doesn’t go over the line of credit limit. Doing so may incur fees and penalties.

To get a business line of credit, you’ll need to establish that your business is legitimate (expect the lender to ask how long the business has been in existence – six months or more is a good rule of thumb for loan approval.)

You’ll also need to establish a minimum annual revenue flow, which shows the lender you have the ability to repay the line of credit. A rule of thumb here is annual revenues equal or higher than your line of credit loan request (i.e., if you’re asking for a LOC of $25,000 you’ll need to show that, at minimum, your business revenues exceed $25,000 annually.)

Who Can Use A Business Line of Credit?

Business lines of credit are suitable for established businesses with larger recurring expenses. Businesses generally use business lines of credit for everyday operations such as payroll, supplies, general cash flow, seasonal inventory, or more.

Even if cash flow is sometimes sufficient, every business has rough periods. Successful maintenance of any company requires regular cash flow. Many companies apply for a line of credit and only use it when they need it.

To be eligible, you will usually need to be in business for a year with annual revenue of $25,000. Additionally, applicants may need a credit score of 600 or above. Lines of credit usually need to be repaid within 3-12 months and are a form of short-term financing.

APR rates can range from 9%-99% depending on credit history and annual business turnover, among other variables. While the rates can be high, this is offset because businesses only need to use what they require and only pay interest on what they borrow.

How to Get a Business Line of Credit

Below are five general steps you can take to open a business line of credit.

  1. See where you stand. When you apply for a business line of credit, the lender may review details like your credit score (personal and business), time in business, and annual income. It’s critical to know where you stand in each category.
  2. Determine if you’re eligible. Make a list of lenders offering business lines of credit with elgibillity criteria you can likely satisfy. If you know you have fair credit and a lender requires good credit, you shouldn’t include the lender on your list of possible funding sources.
  3. Gather your documents. Many lenders will require you to submit documentation along with your financing application. Having your business tax returns, business bank statements, and other financial reports ready could speed up the funding process.
  4. Shop around. Comparing interest rates, fees, and benefits from multiple lenders can help you find a business line of credit that’s best for your situation.
  5. Apply. Once you settle on your preferred business line of credit, it’s time to apply. Be sure to fill out the complete application and send in any documentation the lender requests promptly

Business Credit Cards vs. Small Business Credit Lines

Business credit cards and business credit lines own the same financial lineage – they both offer business owners access to much-needed capital.

That said, there are differences between the two.

  • A small business line of credit: Essentially, a small business line of credit is what’s known in banking circles as a revolving loan. The loan amount and repayment terms are agreed upon by the lender and the borrower in advance. Once the line of credit is approved, the business owner can access the line of credit funds at any time. The borrower can repay the line of credit at any time and even at minimal amounts along the way. The fee to garner a small business line of credit is the interest rate (along with any loan service fees) charged by the LOC lender to the borrower.
  • A business credit card: A business credit card offers a similar deal – access to a fixed amount of capital on an ongoing basis, with interest rates and fees charged by the card provider to the cardholder. While a business credit card is similar to a line of credit, not every merchant may accept the specific business credit card. On the upside, a business credit cardholder may earn card rewards and perks with the card, such as cashback, frequent flier miles, and discounts on common business services like vehicle rentals, hotel stays, and dining and entertainment venues. Additionally, if the cardholder pays the entire balance off every month, the business owner is basically getting an interest-free loan from the credit card company.

Secured vs. Unsecured Line of Credit

One element that a line of credit has in common with a term loan is the possibility of it being secured or unsecured. Here are some of the key differences between a secured and unsecured business line of credit.

  • Unsecured business line of credit: If a lender is comfortable with the risk profile of the borrower, they may approve an unsecured business line of credit, meaning that they don’t demand collateral. This is usually the case with well-established companies that have a good revenue record and are requesting a smaller amount (generally less than $100,000).
  • Secured business line of credit: when a lender feels there’s a higher level of risk, they may insist upon a secured line of credit. In this situation, they will demand some form of collateral – an asset belonging to the company that the lender can claim if the borrower defaults on the loan.

Final Thoughts

A small business line of credit can provide a financial cushion when your business experiences a cash flow crunch. If you anticipate slow seasons in your business, it may be best to apply for this flexible financing option in advance, long before your business needs to access it.

About the Author

Michelle Lambright Black

Michelle Lambright Black

Credit Expert and Financial Writer

Michelle Lambright Black is a credit expert with over 19 years of experience, a freelance writer, and a certified credit expert witness. Michelle's work is featured with numerous publications including Forbes, myFICO, Bankrate, U.S. News & World Report, and Reader’s Digest, among others.

More about me