Best Business Lines Of Credit: A business line of credit allows business owners to access a line of credit based on their needs. The funds are typically used to cover recurring or unexpected short-term expenses, improve cash flow, or take advantage of new business opportunities.
Since repayment terms and eligibility requirements vary by lender, the best line of credit for your business will depend on your business’s specific needs and financial situation. These are the best options.
6 Best Business Lines Of Credit List
01. Lendio: Lender Comparison Site
Best for a Lender Comparison Site
Lendio
Rating: 5.0
# Loan Amounts: From $500 to $5 million
# APR Range: As low as 3%
# Minimum Credit Score: 560
Editor’s Opinion: Lendio stands out as a marketplace that connects business owners with over 75 lenders through a single application. By submitting one application with Lendio, you receive offers from their lending partners, helping you find the best deal for your specific needs.
Pros:
# One application connects you with over 75 lenders
# Wide variety of loan products, including term loans, lines of credit, and SBA loans
Cons:
# Some lenders charge prepayment penalties
# Financing terms and times vary depending on the specific lender
Details:
# General Description: Lendio is an online business lending marketplace connecting potential borrowers with traditional banks and non-bank online lenders. It has helped small business owners secure over $12 billion in financing nationwide. Lendio offers a one-stop shop for various loan products, including business loans, lines of credit, SBA loans, equipment financing, merchant cash advances, commercial mortgages, invoice factoring, and business acquisition loans.
# Eligibility: Minimum credit score of 560, six months in business, and a minimum annual income of $50,000.
# Funding Time: The application process takes 15 minutes. Once you review your offers and receive approval from your lender, you can receive your funds in as little as 24 hours.
Also Read: The Best Loan Company
02. OnDeck: Less Than Optimal Credit
Best for Less Than Optimal Credit
OnDeck
Rating: 4.0
# Loan Amounts: From $5,000 to $250,000
# APR Range: Varies depending on the loan
# Minimum Credit Score: 625
Editor’s Opinion: OnDeck is chosen for its low minimum credit score requirement and its variety of business loan products. With a minimum credit score requirement of 625, OnDeck is accessible to a wide range of borrowers. It offers term loans with repayment terms of up to 24 months and lines of credit with 12-month repayment terms.
Pros:
# Term loans from $5,000 to $250,000
# Lines of credit from $6,000 to $100,000
# Same-day financing available
# Low minimum credit score requirement
Cons:
# Minimum annual income requirement of $100,000
# Must have been operating for at least a year
# Does not lend to businesses in North Dakota
Details:
# Eligibility: Minimum credit score of 625, one year in business, and a minimum income of $100,000 per year.
# Response Time: Apply and receive a decision from OnDeck the same day.
Expert Opinion: OnDeck has carved out a niche in the alternative lending space, offering quick access to capital for businesses that don’t qualify for traditional bank loans. Its great advantage is the availability of funds on the same or the next day without being affected by a strict credit inquiry. However, this aggressive lending practice also comes with a high price.
Also Read: The Best Loan Company
03. American Express Business Line of Credit
Ideal for Small and Large Lines of Credit
American Express Business Line of Credit
Rating: 4.0
# Loan Amounts: From $2,000 to $250,000
# APR Range: N/A
# Minimum Credit Score: 660 FICO at time of application
Editor’s Opinion: American Express Business Blueprint™ is renowned for its American Express® Business Line of Credit (formerly Kabbage by American Express and Kabbage Funding™), providing financing between $2,000 and $250,000. Customers incur a fee for each month they have an outstanding balance, with total monthly fees varying based on the loan term.
Pros:
# No early payment penalty
# Four different payment options
# Offers small and large lines of credit
Cons:
# Monthly charges for unpaid balances
# Requires personal guarantee
# Lines of credit over $150,000 are available only to borrowers meeting additional criteria
Details:
# Eligibility: Minimum credit score of 660 FICO at the time of application, at least one year in business, and an average income of at least $3,000 per month.
# Response Time: Once approved, funds may take up to three business days to appear in your account, depending on your bank.
Expert Opinion: The American Express® Business Line of Credit allows you to qualify with a 660 FICO credit score at the time of application, making it unsuitable for businesses with poor credit scores. Funds are typically deposited within three business days, which can be an issue for those needing immediate cash.
04. BlueVine: Flexible Lines of Credit
Best for Flexible Lines of Credit
BlueVine
Rating: 3.5
# Loan Amounts: From $5,000 to $250,000
# APR Range: Simple interest starts at 5.9% or 7.8%
# Minimum Credit Score: 625
Editor’s Opinion: BlueVine offers flexible lines of credit with the potential for credit increases after repayment begins. Startup business owners can receive funds between $6,000 and $250,000. BlueVine’s Flex 6 payment structure involves weekly payments for 26 weeks, and eligibility for a credit increase starts after 45 days of payments.
Pros:
# Quick decision and funding
# Lines of credit up to $250,000
# Low credit score requirement
Cons:
# No mobile app for the line of credit
# Monthly income requirement
# Not available to businesses in certain states and territories
Details:
# Eligibility: Varies by program. The weekly plan requires a minimum credit score of 625, two years in business, and a minimum income of $40,000 monthly. The monthly plan requires a minimum credit score of 650, three years in business, and a minimum income of $80,000 monthly.
# Response Time: Receive a decision in as little as five minutes, and instant funding with a Bluevine business checking account, or within 24 hours for other accounts.
Expert Opinion: Bluevine offers a bank coverage program providing FDIC insurance up to $3 million, valuable during banking crises.
05. Fundbox: Short-Term Lines of Credit
Best for Short-Term Lines of Credit
Fundbox
Rating: 3.5
# Loan Amounts: From $1,000 to $150,000
# APR Range: Interest rates start at 4.66%
# Minimum Credit Score: 600
Editor’s Opinion: Fundbox offers short-term lines of credit with quick turnaround times. Business owners can apply for revolving lines of credit up to $150,000 with payment terms of 12 or 24 weeks.
Pros:
# No early payment penalty
# Low minimum annual income requirement
# Next business day financing
Cons:
# Only short-term repayment terms are available
# Does not disclose APR
Details:
# Eligibility: Minimum credit score of 600, six months in business, and a minimum income of $100,000 per year.
# Response Time: Funds are available as soon as the next business day.
Expert Opinion: Fundbox is accessible for businesses with credit issues, offering quick approval and integration with Stripe for convenience.
06. Wells Fargo: Traditional Lender
Best for a Traditional Lender
Wells Fargo
Rating: 3.5
# Loan Amounts: From $5,000 to $100,000
# APR Range: Prime + 1.75% to Prime + 9.75%
# Minimum Credit Score: Not disclosed
Editor’s Opinion: Wells Fargo offers three lines of credit for businesses: an unsecured line of credit, a Small Business Advantage, and a Prime line of credit. The unsecured line of credit is the best option from a traditional lender, providing access to lines of credit between $5,000 and $100,000 with monthly payments.
Pros:
# No collateral required
# Low interest rates available
# Available rewards
Cons:
# Annual fee after the first year
# Requires at least two years in business
Details:
# General Description: Wells Fargo’s unsecured business line of credit is ideal for existing customers or small business owners looking to supplement cash flow, cover everyday expenses, expand, or seize unexpected business opportunities through a traditional bank.
# Eligibility: Minimum credit score not disclosed, at least two years in business, and minimum annual income not disclosed.
# Response Time: Unsecured line of credit and Small Business Advantage applications receive a response within 10 business days, while Prime line of credit applications take up to two weeks after submitting the required documentation.
Tips for Comparing Business Lines of Credit
Prequalify Whenever Possible
- Why: Prequalification allows potential borrowers to see what loan amounts, rates, and repayment terms they might qualify for without affecting their credit score.
- How: Share relevant financial details such as income and financing needs with lenders who offer prequalification, typically through a soft credit inquiry.
Keep Payment Terms and Flexibility in Mind
- Why: Different lenders have varying payment structures (monthly, daily, weekly).
- How: Choose a payment schedule that fits your business cash flow and financial management preferences.
Beware of Additional Fees
- Why: Some loans come with origination fees, late fees, prepayment penalties, etc.
- How: Confirm each lender’s fee structure and consider these costs when comparing offers.
Evaluate the Lender’s Customer Service Options
- Why: Good customer support can be crucial if you encounter issues with payments or need assistance.
- How: Research customer service reviews and resources offered by the lender before making a decision.
Methodology
We analyzed 16 popular lenders based on 16 data points in categories such as loan details, loan costs, eligibility, affordability, customer experience, and the application process. Here’s the breakdown of our weighting system:
- Loan Cost: 35%
- Loan Details: 25%
- Customer Experience: 20%
- Eligibility and Accessibility: 10%
- Application Process: 10%
What is a Business Line of Credit?
A business line of credit provides access to cash as needed, up to a predetermined limit, without a one-time disbursement. It allows companies to finance ongoing or unexpected expenses and is typically unsecured.
How Does a Business Line of Credit Work?
You receive a credit limit to draw from as needed over a draw period. Interest is only paid on borrowed funds. After the draw period, the repayment period begins, during which the outstanding balance and interest must be repaid.
Pros and Cons of Business Lines of Credit
Pros
- Avoid Excessive Debt: Only borrow what you need.
- Fill Cash Flow Gaps: Access to funds when needed.
- Interest on Borrowed Funds Only: Lower interest costs.
- Quick Access: Fast availability of funds.
Cons
- Personal Guarantee: May be required.
- Collateral: Secured lines require it.
- Fees: Potential for annual, withdrawal, and other fees.
- New Business Challenges: Harder to obtain with bad credit or as a new business.
Types of Business Lines of Credit
Secured Business Lines of Credit
- Collateral: Required, like inventory or accounts receivable.
- Pros: Easier to qualify, lower interest rates.
- Cons: Risk of losing collateral.
Unsecured Business Lines of Credit
- Collateral: Not required, but may need a personal guarantee.
- Pros: No risk of losing collateral.
- Cons: Higher interest rates, and stricter requirements.
How to Choose a Business Line of Credit
Eligibility Requirements
- Credit Rating: Personal and business credit scores matter.
- Time in Business: Varies by lender, from six months to two years.
- Annual Revenue: Check minimum requirements.
Line of Credit Amount
- Match Needs: Ensure the credit limit fits your business needs.
Funding Speed
- Urgency: Choose lenders known for fast processing if needed.
Payment Terms
- Repayment Period: Select terms that suit your business cash flow.
Fees
- Types of Fees: Check for origination, annual, and maintenance fees.
- APR Comparison: Look at annual percentage rates for total cost.
Where to Get a Business Line of Credit
Banks
- Pros: Face-to-face interaction, potentially lower rates.
- Cons: Stricter requirements, longer processing time.
Credit Unions
- Pros: Nonprofits, may offer lower rates.
- Cons: Membership requirements.
Online Lenders
- Pros: Wider range, potentially lower rates.
- Cons: Online-only interaction.
How to Qualify for a Business Line of Credit
- Check Your Credit: Personal and business credit scores.
- Perfect Your Business Plan: Update and reflect current business.
- Consider Collateral: Inventory or equipment can help.
- Check Eligibility: Meet lender requirements or find flexible ones.
How to Get a Line of Credit for Your Business
- Decide on Financing Needs: Determine the maximum credit needed.
- Check Your Credit: Ensure there are no errors.
- Research and Compare Lenders: Look at credit limits, terms, and rates.
- Gather Necessary Documents: Tax returns, bank statements, business plans, and income statements.
- Submit Application: Apply online or in person with the chosen lender.
Is a Business Line of Credit a Good Idea?
A business line of credit is ideal for short-term cash flow issues or covering immediate expenses, not for long-term growth or large expansions. Evaluate the specific needs and timing of your business.
Business Line of Credit vs. Other Financing Methods
Small Business Loan
- Disbursement: Lump sum.
- Repayment: Fixed installments over a set period.
- Best For: Large purchases and long-term needs.
Business Credit Card
- Credit Limit: Typically lower.
- Best For: Small, everyday expenses.
- Qualification: Focus on personal credit score, good for startups.
Final Considerations
When deciding on a business line of credit, ensure it aligns with your business needs, eligibility, and repayment capacity. Evaluate all costs, terms, and the lender’s customer service to make an informed choice.
