6 Best Business Lines of Credit for April 2024
Updated March 28, 2024 at 3:09 pm
A business line of credit can be a great way to help fund unexpected expenses or bridge a gap in cash flow. Whether you have to make an emergency repair or just cover payroll for a short period, these flexible funding options give you access to cash as you need it.
Terms for business lines of credit can vary widely, including interest rates, repayment terms, fees and eligibility. We’ve compared offerings from top financial institutions to help narrow down the best business line of credit for your needs.
Methodology Our research is designed to provide you with a comprehensive understanding of personal finance services and products that best suit your needs. To help you in the decision-making process, our expert contributors compare common preferences and potential pain points, such as affordability, accessibility, and credibility.
Our Picks - Best Secured Line of Credit: American Express Business Line of Credit
- Best for Interest Rate: Wells Fargo BusinessLine Line of Credit
- Best for Flexibility: Bluevine Line of Credit
- Best for Bad Credit: Fundbox
- Best for Fast Funding: OnDeck
- Best for Existing Bank of America Customers: Bank of America Unsecured Business Line of Credit
Best Business Credit Lines of 2024
Best Secured Line of Credit
American Express Business Line of Credit
Vault Verified
Why we chose it: Though the American Express Business Line of Credit requires a personal guarantee on the money you borrow, it offers a range of repayment terms and no prepayment penalties. Read our American Express Business Line of Credit review.
Pros
- Lines of credit between $2,000 and $250,000 available for borrowers with a credit score of at least 660
- Repayment term lengths of six, 12, 18 or 24 months
- No penalties for prepayment
Cons
- All loans require a personal guarantee
- Higher monthly fees for longer repayment terms
- Loan fee charged any month you have an outstanding balance
Additional Information
- Minimum Credit Score: 660
- Earliest Funding Time: 1 business day
- Minimum Requirements: Borrowers must be over 18 years of age, have started their business at least one year prior, have a minimum credit score of 660 and have an average monthly revenue of at least $3,000 to be eligible.
Best for Interest Rate
Wells Fargo BusinessLine
Vault Verified
Why we chose it: Interest rates are extremely competitive for all of Wells Fargo’s business line of credit products, but especially on its unsecured BusinessLine line of credit; you just might need a higher credit score to qualify.
Pros
- Interest rates as low as the prime rate, plus 1.75%
- Revolving credit line up to $150,000
- Annual fee waived in the first year
Cons
- Applicants typically have a minimum credit score of 680 for borrower or guarantor
- Personal guarantees required from any owner with 25% or more ownership in the applicant business, with a minimum combined aggregate of 51% ownership
- Available for customers in business for more than two years
Additional Information
- Minimum Credit Score: Not specified, though 680 is the typical score according to Wells Fargo
- Earliest Funding Time: Not disclosed
- Minimum Requirements: Applicants must have been in business for at least two years. Personal guarantees are required for owners with 25% or more ownership in the business, with a minimum combined aggregate of 51% ownership.
Best for Flexibility
Bluevine Line of Credit
Vault Verified
Why we chose it: Bluevine offers revolving credit lines of up to $250,000 with both monthly and weekly repayment plans, and credit lines can be increased over time. Plus, the minimum credit score is lower than many competitor options. Read our Bluevine line of credit review.
Pros
- Credit lines up to $250,000 that replenish as you make payments
- Access to funds in as little as a few hours
- Low minimum credit score
Cons
- Requirements for a monthly repayment plan are stringent
- High monthly revenue requirement for applicants
- Does not accept applicants from Nevada, North Dakota or South Dakota
Additional Information
- Minimum Credit Score: 625
- Earliest Funding Time: A few hours for bank wires at $15 fee; 1 business day for ACH transfers
- Minimum Requirements:
- For weekly repayment plan: 625+ credit score; more than 24 months in business; $40,000 in monthly revenue
- For monthly repayment plan: 700+ credit score; more than 3 years in business; $80,000 in monthly revenue
Best for Bad Credit
Fundbox
Vault Verified
Why we chose it: Fundbox offers more accessible lines of credit than many other institutions on this list, with a minimum credit score of only 600 and an operating requirement of just six months in business.
Pros
- Low credit score and business opening requirements
- Application decision in as little as three minutes
- Mobile app for easy access to funds
Cons
- Limited term lengths
- Fees can vary by applicant and over time
- Require weekly payments
Additional Information
- Minimum Credit Score: 600
- Earliest Funding Time: 1 business day
- Minimum Requirements: Based in the U.S.; at least $100,000 in annual revenue; preferred 6 months or more in business; 600+ credit score
Best for Fast Funding
OnDeck
Vault Verified
Why we chose it: As its name suggests, OnDeck offers quick access to funds for businesses who need money fast—with instant access to funds on approval. Eligibility is more accessible too, with a minimum credit score of 625.
Pros
- Quick access to funds
- Low minimum credit score requirement
- No hard credit pull to check eligibility
Cons
- Same-day funding only available in certain states and on lines of credit up to $100,000
- High interest rates
- Maximum credit line of $100,000
Additional Information
- Minimum Credit Score: 625
- Earliest Funding Time: Instant for transactions between $1,000 and $10,000
- Minimum Requirements: Minimum 1 year in business; 625+ credit score; at least $100,000 in annual revenue
Best for Existing Bank of America Customers
Bank of America Unsecured Business
Vault Verified
Why we chose it: Bank of America’s Unsecured Business Line of Credit has competitive interest rates to start with, but Preferred Rewards for Business members with high balances can qualify for between 0.25% and 0.75% off their rate.
Pros
- Doesn’t require collateral
- Competitive interest rates
- Additional interest rate discounts for eligible Preferred Rewards for Business members
Cons
- High credit score requirement of 700+
- Must maintain high balances with Bank of America to qualify for best rates
- Minimum two years in business
Additional Information
- Minimum Credit Score: 700
- Earliest Funding Time: Not disclosed
- Minimum Requirements: Minimum 700 credit score; at least two years in business under existing ownership; $100,000 or more in annual revenue
What Is a Business Line of Credit?
A business line of credit is a way to borrow money for your small business. Designed for short-term borrowing needs—like emergency expenses—a line of credit lets you borrow only the amount you need, when you need it, and then pay it back according to preset terms.
This differs from a business loan, which offers a lump sum of money that you then pay back in monthly installments. With a business line of credit, you’ll only have to pay interest on the amount you actually use. On the downside, business lines of credit often come with additional fees, like maintenance or origination fees.
How Do Business Credit Lines Work?
Business lines of credit are offered by many of the same banks and other financial institutions as other loans.
If you meet requirements for credit score, annual revenue and other eligibility standards, the institution will offer you a credit limit you can borrow against. As you borrow against this limit, you’ll be subject to repayment terms as outlined by your lender. This might mean weekly or monthly payments with varying terms and fees.
Interest rates and fees are often higher on a business line of credit than a traditional business loan. Depending on your lender, you might pay the following charges:
- Origination fee: This is a one-time fee for opening your line of credit.
- Maintenance fee: This is a recurring fee, usually charged either monthly or annually for as long as you keep your line of credit open.
- Draw fee: Some lenders might charge a nominal fee for making a draw against your credit limit.
- Inactivity fee: If you take on a line of credit but don’t use it for an extended period of time, you could be subject to an inactivity fee.
Finally, it’s important to note that business lines of credit can be either secured or unsecured. If your line of credit is secured, you’ll be required to provide collateral that the lender can seize if you fail to repay what you owe.
Many business lines of credit—both secured and unsecured—require a personal guarantee. That means the lender can seize your personal assets to cover your debt.
Why Would You Need a Business Line of Credit?
Because you only pay interest on the amount you borrow with a business line of credit, they make the most sense for borrowers who need smaller amounts. Fees and interest rates are high, so they are not the best borrowing solution if you need long-term cash flow support or a large influx of capital. Consider a business line of credit if you:
- Have an emergency expense to cover. Perhaps you have a repair to make or a short-term product shortage to cover. If you just need a small amount to get you through this one-time occurrence, a business line of credit can help.
- Need to cover payroll. If you can’t pay your employees, that’s clearly an issue. But if you have a short-term cash flow shortage and need to bridge the gap in payroll, you can reach for a business line of credit.
- You don’t keep much cash on hand. Maybe you don’t have a current emergency or cash flow problem, but a low bank balance means you could face this situation in the future. A business line of credit can be a good insurance policy if you need funds you can dip into on short notice.
How To Choose the Best Line of Credit for Your Business
With so many lines of credit available from various lenders, it can be hard to narrow down which one is best for you. Consider factors such as interest rates and fees first, but don’t discount the importance of how quickly you can access your money and if you’ll need a personal guarantee.
Rates and Fees
Business lines of credit can be expensive ways to borrow if you aren’t careful. Compare interest rates as well as maintenance and other fees from any account you are eligible for to find the cheapest option.
Eligibility Requirements
Eligibility for a business line of credit can be stringent and include factors such as your personal credit score, annual business revenue and how long your business has been open. If you have a low credit score or your business has been operating for less than a few years, your options will be more limited.
Collateral and Personal Guarantee
Business lines of credit are available in both secured and unsecured forms. Depending on the terms offered, it might be worth it to choose a secured line of credit. If you are worried about putting up collateral, however, opt for an unsecured line of credit. Similarly, many business lines of credit require a personal guarantee, which means your personal assets are also at risk. Proceed with caution before accepting these terms.
Repayment Terms
Depending on the lender, you will be required to repay the amount you borrow against your line of credit weekly or monthly and over terms ranging from a few weeks to several years. Interest rates and fees may vary for each option as well. Compare options carefully and find one that works with your cash flow.
Quick Access to Funds
Since a business line of credit is often used to cover emergency expenses, it’s important that you can access funds quickly. While most allow you to get your funds in a few business days, some may take longer.
Business Lines of Credit vs. Other Business Financing Methods
Business lines of credit can be a good borrowing option for certain situations, but not for others. Their high interest rates and fees mean that you might be better off with a small-business loan or business credit card in some situations.
Business Line of Credit vs. Small-Business Loan
With a small-business loan, you’ll receive one lump sum of cash that you repay in a set period of monthly installments. Businesses that need a larger sum are often better off with this borrowing option. However, you’ll typically need a good to excellent credit score to qualify for the best terms.
Business Line of Credit vs. Business Credit Card
Like business lines of credit, business credit cards offer a revolving line of credit that borrowers can spend against. Your credit limit with a business card will likely be lower than what you’d get with a business line of credit, and the eligibility requirements can be steep for the best cards.
One perk of business credit cards that business lines of credit don’t have, however, is that many come with the opportunity to earn rewards on purchases in the form of cash back or points.
Frequently Asked Questions
What Is the Best Use for a Business Line of Credit?
Business lines of credit are best used for short-term needs, like covering payroll for a short period or paying for an emergency expense. You should avoid using it to supplement cash flow on an ongoing basis, as interest and fees can be expensive.
What Credit Score Do You Need for a Business Line of Credit?
Lenders offer business lines of credit to those with credit scores as low as 600, though a minimum score of around 660 is more typical. Additionally, you might qualify for a lower interest rate or credit limit if you have a lower score.
Can You Have a Line of Credit and Never Use It?
Theoretically, yes. You don’t have to borrow from your line of credit. However, if you aren’t using your line of credit, you could be subject to inactivity fees or even have your account closed.
Editorial Note: Opinions expressed here are author’s alone, not those of any bank, credit card issuer, hotel, airline or other entity. This content has not been reviewed, approved or otherwise endorsed by any of the entities included within the post. We may earn a commission from partner links on Newsweek, but commissions do not affect our editors’ opinions or evaluations.
