The Best Line Of Credit Options For Small Businesses
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A line of credit is one of the most useful tools at a business owner’s disposal. Merchants with a credit line can have short-term funds available within a few days without going through a lengthy application process every time. These funds can be used for many business purposes, such as working capital, business growth, or emergency funds.
Are you looking to gain access to a business line of credit? Or do you have a line of credit already but want to know what your other options are? Either way, you’re in luck! We’ve sought out and evaluated the best credit lines currently available to businesses of all sizes — from startups and incubator businesses to stable and established companies.
Learn More About Our Top Picks
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Other Featured Options:
- Fundation:
- Borrowing amount: $20,000 to $150,000
- Term length: 18 months
- Required time in business: 12 months
- Required credit score: 660
Read more below to learn why we chose these options.
Table of Contents
How We Picked The Best Business Line Of Credit Lenders
We review numerous lenders here at Merchant Maverick, so what you see below is based on our reviews of each company in question.
We consider the following factors when writing our reviews:
- Rates & Fees: How much will it cost you?
- Borrower Requirements: Who qualifies? And are the requirements reasonable given the rates?
- Borrowing Amounts: Can the lender service typical expenses? Is it aiming for small or large businesses?
- Application Process: How much of a hassle is it to apply, and how quickly can you expect your money?
- Transparency: Does the lender reveal its rates and fees upfront, or does it try to hide them from prospective customers?
- User Reviews: What do customers think about the lender? Have there been a lot of complaints filed?
The Best Business Lines Of Credit
Having examined the top providers of business lines of credit and evaluated them according to our criteria, we’re now going to name the lenders whose lines of credit best fit your business. No lender is best for every business, so we’re tailoring our list to fit different business needs.
1. Lendio: Best Business Line Of Credit Overall
Lendio
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Lendio is not an originator of loans. Rather, the company provides a platform for business financing that matches businesses to funders. Just tell Lendio about your business and the type of funding you’re looking for, and Lendio will (hopefully!) take care of the rest.
Lendio works with over 300 different lenders, so it doesn’t have a single set of qualifications for funding that a business must meet. However, it does recommend that a business applying for a revolving line of credit (or another financing product) have at least six months of business history, a personal credit score of at least 560, and at least $50,000 in annual revenue.
After you apply, you should get offers from the lenders that you may be eligible for in 72 hours or less. It’s not a super-quick financing solution.
Pros
- A high potential credit limit
- Long-term financing options available
- Applicants can quickly be prequalified
- The application process is fast and easy
Cons
- Rates can be expensive
- Funds can take a while to disburse
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2. OnDeck: Best Immediate Line Of Credit
OnDeck
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OnDeck is known for offering fixed-term business loans, but it also offers business lines of credit.
Although OnDeck’s rates (which currently range from 19.9% - 61.9% APR) can get a little high, OnDeck has a fast application process and easy-to-meet borrower requirements. Most borrowers will have a final decision within 24 hours after applying. If approved, borrowers can start requesting funds from their credit line immediately. That’s why we’ve designated OnDeck as the best choice for businesses needing an immediate unsecured line of credit.
OnDeck’s credit limits currently range from $6,000 to $100,000, with repayment terms of 12 months. Unlike the lender’s short-term loans, which are usually repaid daily, draws from your credit line are repaid weekly. OnDeck does not charge a fee for drawing from your line, but it does charge a $20 maintenance fee, which adds to the overall cost.
Pros
- Borrower qualifications are lower than with a traditional bank
- Lower costs for repeat customers
- The application process is fast and easy
- Funds are disbursed quickly
Cons
- Financing isn’t available in some states
- Not available to businesses in some industries
- Rates can be expensive
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3. National Business Capital: Best For Bad Credit
National Business Capital
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Like Lendio, National Business Capital is a business funding platform that matches you to the lenders best suited to your funding needs from its network of loan originators. There are over 75 lenders in National Business Capital’s lender marketplace.
National Business Capital does not require its line of credit applicants to have a minimum credit score — hence our designation of National Business Capital as the business line of credit lender best suited to those with bad credit. Plus, it only requires three months of business history, making it easier for certain business types to quality. However, you will need at least $120,000 in annual gross sales to qualify. What’s more, larger businesses will be happy to learn of the high potential credit limit of $5 million.
Unfortunately, some borrowers may only be eligible for a secured line of credit and will probably need to provide collateral and/or a personal guarantee.
Pros
- Financing is available to qualified startups
- High borrowing amounts
- A wide variety of payment schedules offered, from short-term to long-term
- The application process is fast and easy
Cons
- Rates can be expensive
- Collateral/blanket lien may be required
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4. Fundbox: Best Start Up Business Line Of Credit
Fundbox
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Gone are the days when you had to have a large, well-established business to qualify for a credit line. With Fundbox, you might qualify even if you’ve only been in business for three months. This service offers invoice-backed and traditional lines of credit to eligible businesses.
Fundbox currently offers the most accessible business lines of credit available. To qualify, you must have been using a compatible business account (with one of over 12,000 banking institutions in the US) for at least three months or compatible accounting or invoicing software for two months. You’ll also need a credit score of at least 500, which, hopefully, should be doable for just about everyone.
Fundbox also has one of the fastest applications available. Typically, you can create an account, apply, and get a decision within a few minutes. Borrowers might be eligible for a credit line up to $100,000 with repayment term lengths up to 24 weeks.
Certainly, Fundbox offers a useful service, but it’s not right for all businesses. The fees are higher than those of services that cater to more established businesses, so if you have been in business for a while and have strong financials, you might be able to find better rates elsewhere. Nonetheless, Fundbox is an invaluable source of financing for small businesses in need of short-term working capital.
Pros
- The application process is fast and easy
- Low personal credit score requirements
- Multiple avenues of customer support
Cons
- Rates can be expensive
- Repayments are required frequently
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5. Fundation: Best For Low Rates
Fundation
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Fundation is an online lender that offers lines of credit and term loans to eligible businesses.
Because of the requirement that an applying business must have at least three full-time employees, Fundation might be a little more difficult to qualify for, but eligible borrowers will benefit from its favorable terms and fees. Fundation offers credit lines between $20,000 and $150,000. Draws have repayment terms of 18 months, which is longer than most other lenders on this list. Additionally, with APRs that range from 7.99% – 29.99%, Fundation’s rates are lower than those of most of the above lenders.
The application process to gain access to a line of credit is short, and most applicants can expect a decision in fewer than seven days. Between the low rates (Fundation has earned our designation “Best For Low Rates”) and the fast application process, this is, without a doubt, a lender worth checking out if your business isn’t yet big enough to get a line of credit from a bank or the SBA. Also, note that Fundation offers secured lines of credit. A blanket lien will be required.
Pros
- Monthly and biweekly payment options
- No prepayment penalties
- Customers have an assigned account manager
Cons
- Borrower qualifications might be hard to meet
- A blanket lien is required
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6. Fundation: Best For Low Rates
Fundation
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Fundation is an online lender that offers lines of credit and term loans to eligible businesses.
Because of the requirement that an applying business must have at least three full-time employees, Fundation might be a little more difficult to qualify for, but eligible borrowers will benefit from its favorable terms and fees. Fundation offers credit lines between $20,000 and $150,000. Draws have repayment terms of 18 months, which is longer than most other lenders on this list. Additionally, with APRs that range from 7.99% – 29.99%, Fundation’s rates are lower than those of most of the above lenders.
The application process to gain access to a line of credit is short, and most applicants can expect a decision in fewer than seven days. Between the low rates (Fundation has earned our designation “Best For Low Rates”) and the fast application process, this is, without a doubt, a lender worth checking out if your business isn’t yet big enough to get a line of credit from a bank or the SBA. Also, note that Fundation offers secured lines of credit. A blanket lien will be required.
Pros
- Monthly and biweekly payment options
- No prepayment penalties
- Customers have an assigned account manager
Cons
- Borrower qualifications might be hard to meet
- A blanket lien is required
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When Should You Get A Credit Line From A Business Line Of Credit Lender?
Business lines of credit aren’t necessarily the cheapest or easiest way to borrow money, so why would you want one?
The most significant advantage offered by a revolving line of credit is flexibility. Here’s Pegah Saeedi of BlueVine on her company’s lines of credit:
A BlueVine Line of Credit is a great tool for businesses when they need quick access to revolving credit. It allows for a one time use or multiple uses of the line, depending on what their business need is at the time. A BlueVine Line of Credit can help when you have unexpected cash flow gaps, and can also be used for expansion, new projects, new equipment, and more.
Aditya Narula, head of the customer service department at Kabbage, has a similar take:
Lines of credit give small business owners greater control over their cash flow. With the flexibility to take only what they need and instant deposits, small business owners can rely on their Kabbage line of credit to help with rent, payroll, inventory and invest in their business. Flexible funding is especially critical to growth and strategic business management. To capitalize on opportunities, small business owners need to be able to access capital quickly – they can’t afford to wait weeks or months for loan approvals. So, a line of credit is important to staying ahead.
A business line of credit allows you to draw money as you need it, rather than taking out a large lump sum and immediately paying back interest on it. It can also serve as a rainy day fund for unexpected expenses, granting your business some additional security.
And best of all, they’re (usually) reusable!
“Due to the revolving nature of our line of credit,” says Saeedi, “the credit line will replenish as you make payments.”
You won’t find too many other types of lending that allow that other than credit cards, which are a form of revolving credit.
How To Choose The Right Business Line Of Credit Provider
Choosing the right line of credit means taking stock of your needs as a company and understanding what you actually qualify for.
Consider the following when you’re choosing a lender:
- Cost: Quite simply, can you afford to service the debt you’re taking on? Are cheaper options available?
- Terms: How long do you have between payments? How long will your line of credit be available?
- Qualifications: How long does the lender expect you to have been in business? What’s their minimum credit rating? Minimum revenue?
- Reputation: Does the lender have mostly positive or negative reviews? Do you see common themes between negative reviews?
You’ll also want to consider how quickly you’ll require the funds.
Saeedi, again:
A business owner should consider their eligibility as well as the lender when looking for a line of credit to see what would work best for their situation. Traditional lenders, like banks, can take weeks and sometimes months to get an approval, and therefore aren’t a good fit if you want access to quick and flexible funding.
On the other hand, if you have good credit and can spare the time, you’ll usually get better rates with a bank.
Final Thoughts
Between the options above, most business owners will be able to find financing to suit their needs. All these lines of credit have relatively quick and easy applications and will ensure that you have the capital you need to weather rough patches or grow your business.
Note that many banks and credit unions offer business financing, such as lines of credit. When it comes to business financing, a traditional bank or credit union generally provides the best rates and fees. On the other hand, they are usually difficult to qualify for. However, if you have good credit and a stable business generating consistent revenue, you might have a chance at qualifying. Head over to our article, The 5 Best Banks For Small Business Loans, to learn about our favorite banks for business financing.
If you don’t yet qualify, a business credit card fulfills many of the same needs as a credit line. With a business credit card, you will have immediate access to an additional source of funds and can defer payments to a more convenient time. Additionally, business credit cards offer grace periods, signup bonuses, and savings via rewards, which are not provided by business lines of credit. Just be aware that credit cards typically have higher interest rates than lines of credit. Check out our favorite business credit cards to learn about the cards that might be right for your business.
In Summary: The Best Business Lines Of Credit
- Lendio:
- Borrowing amount: $1,000 to $500,000
- Term length: 1 to 2 years
- Required time in business: 6 months
- Required credit score: 560
- OnDeck:
- Borrowing amount: $6,000 to $100,000
- Term length: 12 months
- Required time in business: 12 months
- Required credit score: 600
- National Business Capital:
- Borrowing amount: $10,000 to $5,000,000
- Term length: 6 months to 10 years
- Required time in business: 3 months
- Required credit score: N/A
- Fundbox:
- Borrowing amount: $1,000 to $100,000
- Term length: 12 or 24 weeks
- Required time in business: N/A
- Required credit score: 500
- Fundation:
- Borrowing amount: $5,000 to $250,000
- Term length: 3 to 36 months
- Required time in business: One year (sometimes 6 months)
- Required credit score: 620
- Fundation:
- Borrowing amount: $20,000 to $150,000
- Term length: 18 months
- Required time in business: 12 months
- Required credit score: 660
Chris Motola
Finance Writer at Merchant Maverick
Chris Motola is a writer, programmer, game designer, and product of NY. These days he's mostly writing about financial products, but in a past life he wrote about health care and business. He's a graduate of the University of Central Florida.
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Very interesting. This information is very helpful, are you in the business; What is your core business?
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