A closer look at our top business lines of credit
Fundible: Best for flexible lines of credit
Overview: Fundible is an online lender that promises funds after approval within 24 hours — in some cases in as little as one to three hours. It has lenient approval requirements compared to many other lenders and can accommodate new businesses that may not be approved by big banks. Fundible offers lines of credit up to $500,000.
Why Fundible is the best for flexible lines of credit: Fundible lets you make monthly payments on its business lines of credit, and a spokesperson stated lines of credit have revolving terms between six and 120 months. Some online lenders only let you make weekly or biweekly payments and have terms that only go up to 18 months. It also doesn’t penalize businesses for paying off their line of credit sooner than expected.
Who Fundible is good for: New businesses and business owners with bad credit can benefit from loans from Fundible. Its website notes a FICO score of over 500 and an average monthly revenue of at least $8,000. But ideal applicants will have a personal credit score of 600 and an average annual revenue of $200,000.
Backd: Best for high loan limits
Overview: Founded in 2018, Backd is a fintech lender specializing in business lines of credit and working capital loans. It keeps its loan requirements relaxed. And unlike many business lenders, its loans don’t require you to secure them with assets or a personal guarantee.
Why Backd is the best for high loan limits: Backd offers lines of credit between $5,000 to $750,000. This maximum limit is high compared to most lenders’ $250,000 credit limit. You can apply and get approved in less than 24 hours, and there are no limitations on how often you draw funds. You also don’t get tagged with an early prepayment fee if you happen to repay your loan early. Keep its short repayment periods in mind, though. It offers weekly payments across six or 12 months.
Who Backd is good for: This lender is ideal for midsize to large businesses that have fair credit — at least a 600 personal credit score. Businesses will also need an annual business revenue of at least $300,000 to be considered.
SBG Funding: Best for customizable and fast funding
Overview: SBG Funding is an online lender offering a variety of small business funding, from term loans to more alternative lending, like merchant cash advances and invoice financing. Unlike traditional lenders, SBG works to provide flexible financing solutions with less stringent requirements. For example, the online application only requires your most recent business bank account statements, and almost all financing options are unsecured.
Why SBG Funding is best for customizable and fast funding: SBG Funding’s online application typically takes less than five minutes to complete, and the only documents it requires are four of your most recent business bank account statements. Most approvals occur within 12 to 24 hours, and same day funding may be available. SBG’s line of credit terms are flexible, ranging from six to 24 months. Repayment is customizable, with monthly or weekly repayment options and no prepayment penalties. Credit line increases also happen automatically, with eligibility occurring every 60 days.
Who SBG Funding is good for: With a personal credit score requirement of 650, at least six months in business and high annual revenue of $400,000, your business needs to be well established to qualify for SBG Funding’s line of credit. Businesses that meet these requirements may benefit from the customization, fast funding and flexibility SBG’s line of credit offers in comparison to other online lenders.
Bluevine: Best for established businesses
Overview: Bluevine is an online business bank that offers business checking and loan products. For its line of credit, your application can be approved in as little as five minutes. You can then use its handy online dashboard to start drawing funds that same day. Its credit lines go up to $250,000, similar to other online lenders.
Why Bluevine is best for established businesses: Bluevine’s starting interest rates are relatively low. It accepts a fair personal credit score of 625 and offers flexible monthly as well as weekly payments. Some lines of credit stick with daily or weekly payments, which could be an aggressive debt schedule to keep up. But, you'll need at least 2 years in business with a high monthly revenue to qualify.
Who Bluevine is good for: Your business does need to be well established with a monthly revenue of at least $40,000. At that level, you qualify for its six-month repayment terms. For 12-month repayments, your business will need $80,000 in monthly revenue. Bluevine doesn’t charge fees for origination, maintenance or early repayments.
OnDeck: Best for short-term lines of credit
Overview: In business since 2006, OnDeck is an online lender offering both term loans and lines of credit. For the line of credit, you can choose to have instant funding or same-day funding once approved. Its credit line comes with a $20 monthly maintenance fee that you can bypass by borrowing $5,000 upfront when you open the line.
Why OnDeck is the best for short-term lines of credit: OnDeck offers unsecured business lines of credit for up to $100,000. Eligibility requirements are more relaxed than other lenders that offer unsecured business lines of credit. You only need a personal credit score of 625, one year in business and an annual revenue of $100,000.
Who OnDeck is good for: OnDeck business lines of credit work best for businesses needing fast funds that may not qualify with traditional lenders. Repayment terms are 12 to 24 months for each draw, which resets each time you make a new draw.
American Express Business Blueprint™️: Best for secured line of credit
Overview: America Express Business Blueprint™, formerly Kabbage, is a service from American Express offering lines of credit. This secured line of credit is unusual in that it doesn’t charge interest — which can make comparing it to other lines of credit tricky. Instead, you pay a monthly fee equal to a percentage of your outstanding balance. Those fees can be high, so it’s best to pay down your balance quickly.
Payments on borrowed funds are made monthly.
Why American Express Business Blueprint™ is best for secured lines of credit: Business Blueprint offers an online application and reasonable qualification requirements. Its flexible term lengths and monthly (rather than weekly or daily) payment schedule may be appealing to business owners.
Who American Express Business Blueprint™ is good for: This business line of credit may be best for newer or smaller businesses that would otherwise face higher interest rates. Since the fee is a percentage of the outstanding balance, it might also be good for anyone looking for a microloan-like option.
* All businesses are unique and are subject to approval and review.
Fundbox: Best for fast funding
Overview: Fundbox is an online business lender that has served over 500,000 businesses since it opened its digital doors in 2013. For its unsecured line of credit, it doesn’t charge traditional interest rates on the amount you borrow. It goes with a weekly percentage of the loan amount with loan terms of 12 or 24 weeks.
Why Fundbox is best for fast funding: Fundbox boasts fast approval times as short as three minutes and funding as soon as the next business day. You may also want to have a goal to pay off the loan as quickly as possible. You can avoid the weekly fees by doing so, and Fundbox won’t charge you early repayment penalties.
Who Fundbox is good for: Fundbox may fit businesses that regularly need fast cash to cover operating costs, like shipping or food industry ventures. It also works for newer businesses with just six months of experience. You will need a business bank account to get approved and easily transfer funds.
Bank of America: Best for low interest
Overview: Bank of America is a national bank with nearly 4,000 branches across the U.S. It offers both secured and unsecured lines of credit that you can renew each year. It also offers a cash-secured credit line with lower qualification requirements, with $1,000 as the minimum deposit. All three of its credit lines offer monthly payments, compared to many online lenders that offer daily or weekly payments.
Why Bank of America is best for low interest: Bank of America's business lines of credit have lower interest rates compared to online lenders. Its lines of credit start at 9.50 percent for the secured line and 10.00 percent for its unsecured line.
Who Bank of America is good for: Bank of America’s main lines of credit go best with established businesses in both experience and credit history. They require at least two years in business for most products and a personal credit score of 700.
Wells Fargo: Best for unsecured lines of credit
Overview: Founded in 1852, Wells Fargo is a well-established bank with about 4,700 branches across the U.S. It has three business lines of credit products, including two unsecured lines. One small business line of credit never has an annual fee, while its other lines waive the fee for the first year. Wells Fargo also serves SBA loans to small business owners.
Why Wells Fargo is the best for unsecured lines of credit: Wells Fargo offers two unsecured lines catering to different crowds. Wells Fargo BusinessLine® line of credit works for established businesses, offering loans up to $150,000. And the Small Business Advantage® line helps newer businesses through an SBA-backed line of credit, though it’s limited to $50,000.
All of its credit lines earn rewards on purchases that can be redeemed in several ways, including for travel, check or deposit or for Apple merchandise. You won’t see that perk with many other lines of credit.
Who Wells Fargo is good for: Wells Fargo works best for businesses with strong credit or those seeking an SBA-backed credit line. It requires a personal credit score of at least 680.
What is a business line of credit?
A business line of credit (LOC) is a flexible loan for businesses that works like a credit card. Companies draw money from their credit lines as needed, only paying interest on the portion of money borrowed. For revolving lines of credit, as the borrower repays the amount borrowed, they replenish the funds available. These funds can typically be accessed using a business checking account or mobile app.
How does a business line of credit work?
Business lines of credit are similar to business credit cards. Both allow small businesses to access funds when needs arise instead of the lump sum a business loan would provide. Interest rates on business lines of credit are typically lower than those of a business credit card.
Lenders set credit limits and interest rates based on factors like how long the current owner has been in place and what the company’s annual revenue is. An LOC typically requires renewal annually.
The repayment process varies from lender to lender. With some LOCs, you can make interest-only payments during your draw period. A repayment period of up to five years follows the draw periods. Other lenders treat each draw like an individual term loan — you have a set period to repay each draw you make, which could be weeks or months long.
Secured vs. unsecured business line of credit
Business lines of credit can be unsecured or secured by business assets as collateral. Whether or not you should secure your line of credit depends on the features you’re looking for. A secured credit line helps lenders offer you more flexibility — high loan amounts or lower interest rates. It may also help startups or business owners with bad credit get approved for a credit-builder line.
But if you don’t have much in the way of assets, you could qualify for an unsecured line of credit based on your business’s credit history and financial statements. You will need a stronger financial picture to qualify for an unsecured line vs. a secured line of credit.
Business line of credit vs. business credit card
Business lines of credit and business credit cards both let companies draw funds from a pool of credit on an as-needed basis. While both have their advantages and disadvantages, the best business credit cards have features you won’t find with business lines of credit.
Loan amounts
Lines of credit typically have loan limits of up to $100,000 to $250,000, though some lenders like Wells Fargo, Fundible and Backd offer even higher limits.
Credit cards don’t typically publish credit limits, but it’s likely most business credit cards have lower limits of $100,000 or less. One notable exception is the Divvy Business Card, which offers limits up to $15 million along with rewards for purchases and other benefits of business credit cards you won’t find with business lines of credit.
Interest rates
Business lines of credit may have lower interest rates, especially those offered at banks and credit unions. This can be especially appealing to business owners with excellent credit who are likely the rare few to qualify for the best rates on lines of credit or business credit cards.
But many line of credit lenders won’t disclose the maximum rates for their business lines of credit, which can soar far beyond the maximum limits of business credit cards. For example, the average interest rates for OnDeck lines of credit is 52.60 percent APR.
Some business lines of credit use factor rates instead of interest rates. These are usually reserved for lines of credit available to business owners with bad credit. When you convert factor rates to interest rates, the rates are typically higher than what you'll find with a business credit card. But to be sure, you'll need to know how to convert factor rates to interest rates, which will make it easier to compare loans.
The maximum interest rates for business credit cards tend to be low, even for business owners with poor credit. For example, the Spark 1% Classic from Capital One is open to business owners with a personal credit score of 580 or higher. Its variable rate isn’t as impressive as Wells Fargo’s business lines of credit, but it is far lower than the maximum rates found with business LOCs offered by many online lenders.
Grace period
Business lines of credit charge interest the moment you withdraw funds. That interest continues to grow until your balance is paid in full. Business credit cards work in the same way with one exception — many credit card issuers offer grace periods on purchases.
Between the end of your billing cycle and your payment due date, you have a chance to pay your balance in full and avoid interest charges. Grace periods are at least 21 days and only apply to purchases. If you were to use your business card for a cash advance, the interest would begin accruing immediately and would continue to grow until you paid your balance in full.
Business line of credit vs. business loan
A business line of credit is a revolving type of business loan. A business can withdraw funds whenever the need arises, as long as the credit limit isn’t exceeded. Interest then accumulates on the funds that are drawn, usually at a variable rate. Repayments are made daily, weekly or monthly. For these reasons, a business line of credit can be useful for small business owners looking to cover short-term needs.
In contrast, a small business term loan is a lump sum of money given with a fixed interest rate and paid back through fixed monthly payments. Loan payments start immediately, whether a business uses the money right away or not.
Borrowing limits are often lower on a line of credit than on a business loan, typically ranging from $2,000 to $250,000. But some lenders offer secured lines of credit, which offer higher limits. Secured lines of credit require that you provide collateral.
Additionally, business loans are typically limited to predetermined uses, like purchasing new equipment, while lines of credit are more flexible, allowing you to use the money for whatever business expense you choose.