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Want flexible financing? Then you want a business line of credit.
Think of a line of credit as a financial safety net for your business. It’s there if you need it, but you’re under no obligation to use it. And when you do tap into it, you can use it to cover almost any small business need. Plus, you only pay interest on the funds you use, not the full amount. In other words, it’s as flexible as a double-jointed yoga teacher.
There are multiple benefits to a line of credit that make it ideal for businesses.
One of the coolest things about a business line of credit is that you only pay interest on the funds you use, not the full amount. For example, if you’re approved for a $40,000 business line of credit and you use $20,000 for office upgrades, you’ll just pay interest on that $20,000. This could save you a bundle in interest. Pretty cool, huh?
Just like with a credit card, you can use a business credit line for just about anything. It’s good for businesses looking to expand and in need of a little cash to set up a new location, or to buy inventory. It can also be great to have on deck in the event you might need funds unexpectedly. Or it can be good if you expect to experience cash flow issues due to an off-season or something of the like.
If your business doesn’t match some of the qualifiers below, it may be more challenging to receive funding from our lending partners.
Lendio’s mobile app can help get your business ready for financing. Open a business bank account, get cash flow insights and stay connected to get updated when you have offers available.
When considering a line of credit for businesses, you may find that you have to decide between secured and unsecured lines. Knowing the difference is important to be able to make this decision.
Less strict application requirements
Lower Interest Rates
Higher Funding Amount
No Collateral Required
More Strict Application Requirements
Higher Interest Rates
Lower Funding Amount
Lendio carefully selects the lenders it works with, then works with you to find the best business line of credit for your unique situation.
Starting at 6.2% (simple interest rate calculated over 26 weeks)
Up to $250,000
Min. credit score
Time to funding
As fast as 24 hours after approval
The Bluevine Line of Credit is ideal because your approval is revolving and, as you pay down what you’ve drawn, you’re able to access those funds repeatedly. This means you could have the funds you need to really get your business started.
Daily interest rate minimum of 0.0658%
Up to 18 months
Another option you have for a line of credit is Idea Financial. This financer requires that business owners looking for financing have a minimum of two years in business under their belt and at least $15,000 in revenue each month. They also will not lend to sole-proprietors or non-profits, so those business entities in those categories must look elsewhere for their financing.
Starting at 40% annually
$5,000-$100,000 (varies by state)
12 or 18 months
For an unsecured line of credit, Headway Capital can offer businesses up to $50,000, and they can offer up to $100,000 for a secured line. Headway Capital is known for fast approval and funding times, plus flexible repayment terms. And you can apply even with modest annual revenue and just 1 year in business.
Starting at 4.66% (12 weeks) and 8.99% (24 weeks)
Up to $150,000
New businesses looking for a line of credit can consider Fundbox and get up to $150,000. The company is startup-friendly as it only requires six months in business and a minimum credit score of 650. But the repayment terms are short and require weekly payments, so it’s only for businesses that can manage such a financing option.
Start at 29.9% APR
Up to 12 months
Another option you have when it comes to a line of credit is OnDeck. While the maximum loan amount available with OnDeck is only $100,000, they require a credit score of only 600. However, they do ask for a year in business. So, while they’re a bit more accessible to some businesses, this could make OnDeck less accessible for others. They also offer term loans for businesses that are looking for larger, longer-term, non-revolving types of funding.
Sure, you can go the bank route with a long application process and 75% rejection rate. But if you’re looking for financing in this lifetime, Lendio offers a faster, easier application process.
It’s secured with bank-grade encryption and SSL technology, so you know your information is safe.
We pair you with loan options from our network of 75+ lenders. Our dedicated funding managers can help you weigh the pros and cons of each option.
Once you’re approved, you’ll be able to access your capital in as little as 24 hours.
funded through us
lenders in our network
Sterling HannemannCo-Owner of Seven Brothers
Chloria ChandlerOwner of Bobbee O’s BBQ
A business line of credit is a financing tool for businesses that allows them access to money as expenses arise. It’s also one of the most flexible forms of financing. You can use it for buying equipment, hiring staff, increasing inventory, adding a second location, paying invoices, installing a cappuccino machine, and more.
And because a line of credit is revolving, you can use it as many times as you want. As soon as you repay what you’ve used, those funds become available to you again.
Lines of credit are more similar to a business credit card than a business loan because you don’t receive a lump disbursement at once. Instead, you pay for business expenses using the line of credit and repay the financier back for only the funds used.
If you pay using a line of credit, interest accrues on any balance that is not paid down by the end of each statement period. Like a credit card, as you pay down the balance, the amount of credit available to you increases.
Limits on a business line of credit are set by a lender. Lines of credit are typically renewed over time, assuming the borrower’s creditworthiness remains in good standing. Usually, once you agree to a line of credit, it will remain open until you opt to close it.
If you’re interested in getting a line of credit for your business, you can fill out our easy online application and see your options in as little as 15 minutes. You’ll then see the lenders that might provide a line of credit and the other details of what you qualify for.
To qualify for a business line of credit you will need to have a credit score of 600 or higher and have a proven track record of generating revenue. Newer businesses can look at line of credit options for startups.
You don’t need collateral for a business line of credit. You could get an unsecured line of credit that does not require collateral. But it could cost you more. With unsecured lines of credit, the interest rates can be higher because lenders are taking a larger risk in lending to you.
Once you receive approval for a line of credit and agree to the financier’s terms, the mechanics of a business line of credit are pretty easy to understand.
You can use the funds from the line of credit for any business-related expenses—you can even withdraw them as cash to use for business purchases.
If you don’t repay the financier for any funds used within a statement period, your account will accrue interest.
Generally, you don’t want to spend too close to your credit limit for too long—this situation sends a warning to your lender that your business might be struggling.
In some cases, a financier might require you to pay down your total balance and keep your balance at $0 for a period of time. This shows that your business can survive without using credit.
In other situations, especially in a bad economic environment, a financier might require you to pay back a line of credit all at once. Because of this, you shouldn’t make a line of credit the lifeblood of your company.
Interest rates for a business line of credit can range from 8% to 60%. If your credit score is higher, you can usually secure a rate on the lower end of this scale.
Remember, these interest rates only apply to balances that carry over from repayment period to repayment period. You’ll pay the least amount of interest if you can pay down your balance as quickly as possible.
It is common for lines of credit to have annual fees, so read your agreement carefully.
Generally, you don’t want your balance to be too near your credit limit for too long, especially if you work in a riskier industry like restaurants, construction, or seasonal retail.
Research is always your friend when it comes to small business financing. You can use line of credit calculator to understand exactly what a line of credit could provide for your company.
Lines of credit work differently than small business loans. After applying for a line of credit, you could have funds in one to two weeks if you’re approved. You could get up to $500,000 in funding, which you could then pull on when necessary. It’s there if you need the funds, and if you don’t, it’s nice to know you have it just in case. A huge benefit of a business credit line is that you then only pay interest on and have to repay the money you actually use from your line of credit. To repay you would usually make monthly payments on the amount you’ve borrowed. The term for a line of credit is usually one to two years.
Wondering how we chose the best? Here’s how we went about evaluating the lenders in our network.
*The information contained in this page is Lendio’s opinion based on Lendio’s research, methodology, evaluation, and other factors. The information provided is accurate at the time of the initial publishing of the page (September 1, 2022). While Lendio strives to maintain this information to ensure that it is up to date, this information may be different than what you see in other contexts, including when visiting the financial information, a different service provider, or a specific product’s site. All information provided in this page is presented to you without warranty. When evaluating offers, please review the financial institution’s terms and conditions, relevant policies, contractual agreements and other applicable information. Please note that the ranges provided here are not pre-qualified offers and may be greater or less than the ranges provided based on information contained in your business financing application. Lendio may receive compensation from the financial institutions evaluated on this page in the event that you receive business financing through that financial institution.
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