6 Best Business Lines of Credit in 2022

Business lines of credit (LOCs) offer flexible financing for small businesses. They let you borrow what you need (up to your credit limit), repay what you borrowed, and borrow again, paying interest only on the money you use. That makes LOCs a good way to deal with cash flow problems, take advantage of time-sensitive opportunities, and otherwise handle working capital needs.

After scoring dozens of lines of credit from both traditional banks and online lenders, we found Lendio has the best business credit lines. It offers the best combo of borrower requirements and interest rates―plus, it lets you shop around. But we’ve found other lenders that can work equally well for your business.

So let’s look at the top LOCs.

While business lines of credit often get lumped in with business loans, they’re a different kind of financing altogether. A term loan gives you money in one lump sum, which you pay back over time. A line of credit, though, gives you a credit limit. So you can borrow what you want, up to that credit limit. Then you pay back what you borrowed (plus interest).

A business line of credit lets you keep borrowing and paying back repeatedly (this is called revolving credit), so you don’t have to reapply for financing every time a new need arises within the term of the credit line.

It’s kind of like a business credit card, but lines of credit usually work better for large working capital expenses. (In fact, many businesses enjoy the flexibility of using both a business line of credit and a business credit card.)

When you apply for a business loan, you’re given money for a specific purpose (like buying real estate or a new industrial mixer). But since lines of credit are a form of revolving credit that are not tied to one specific purpose, you can use them for all sorts of needs, such as:

• Purchasing equipment or inventory
• Hiring staff and making payroll
• Taking advantage of time-limited deals
• Creating marketing campaigns
• Smoothing over cash flow issues
• Tiding over seasonal profit changes

That flexibility is great for you as a business owner—but it’s also why lenders like to be careful to who they extend credit lines.

For more details on getting and using a business line of credit, check out our guide to how a business line of credit works.

Lendio is our favorite source for business lines of credit. So why does it deserve the top spot? Easy—because it’s not a lender, but a lending marketplace.

Here’s what that means: you apply to Lendio with a brief online application. Lendio then takes your application and matches you with lenders you qualify for. You then compare offers and choose the one that works best for you.  And Lendio works with several of the other lenders on this list, so your application on Lendio’s lending platform gives you a shot at most of our favorite lines of credit.

Lendio’s marketplace approach lets it offer large lines of credit and competitive rates. So for most businesses looking for a line of credit, Lendio should be your first (and hopefully only) stop.

Bluevine’s business line of credit can compete with the big banks while offering the convenience of an online lender.

Bluevine’s 4.8% starting interest is comparable to (or even lower than) what you can find at a traditional bank. It’s a great deal if you can qualify. Bluevine has higher application criteria than most of the other lenders on this list. It requires at least $10,000 in monthly revenue (which comes to $120,000 in annual revenue). And that’s the minimum—to qualify for the best rates, you’ll need more impressive qualifications than the minimum credit score.

Even so, if you want low rates on your business line of credit, Bluevine is the place to start.

Fundbox might not offer the largest lines of credit, or the cheapest, but it does offer the most accessible.

That’s because Fundbox has the most flexible time in business requirements we’ve seen for a line of credit. While Fundbox does prefer to work with businesses that have been around for at least six months, it does accept applications from businesses as young as two or three months (assuming you meet other borrower requirements). Now, Fundbox’s fee structure can make it expensive (you can get the details in our Fundbox review), and you won’t get an LOC over $100,000.

Even with those constraints, Fundbox offers a good way for business owners with less-than-ideal credit scores to get a line of credit.

The starting rates on OnDeck’s lines of credit may seem a little high, but discounted rates on future financing make OnDeck worth looking at.

That’s right—OnDeck gives repeat borrowers discounted rates. You can even get discounted origination fees when you repeatedly borrow from OnDeck. And when you decide to apply for a term loan in a year or two, that repeat borrowing discount might come in handy.

In other words, if your new line of credit is just the beginning of your business financing needs, then an OnDeck LOC might be your first step to discounted future rates.

If you’ve got a more established business, we suggest looking at Funding Circle

Funding Circle has stricter borrower requirements than other lenders on our list. For instance, it requires businesses to be much older (at least two years) and to have better credit scores. But in return, you can get a very competitive APR (annual percentage rate), fast funding turnaround times, business credit bureau reporting, and more.

So if you can qualify for Funding Circle, the associated perks make it a great lender for more established businesses.

Want to avoid the weekly or even daily payments that most online lenders insist on? Take a look at Kabbage.

Kabbage offers exclusive lines of credit, but with one key advantage over other lenders: It uses a monthly repayment schedule. That kind of schedule can free up cash flow during the rest of your month. Just be careful with Kabbage’s monthly fee―because while it can be affordable (depending on your loan term and fee rate), it can also get quite costly.

But with the right term and rate, Kabbage’s monthly schedule can be just what you need to get more working capital without sacrificing cash flow.

Traditional lenders offer some of the lowest rates and highest credit limits. Plus, many of them offer a choice of both unsecured and secured business lines of credit. (Securing your financing with collateral can further lower your interest rate.)

So why are they so far down on our list? Simple: big banks have much higher application criteria than most online lenders.

For example, almost all banks require your business to be at least two years old, and some insist on more than that. For example, to get a Wells Fargo business line of credit, your business has to be at least three years old.

And while the alternative lenders above look for credit scores ranging from the low to mid-500s, most traditional lenders accept only credit scores over 700. Put simply, banks typically offer lines of credit to only their most creditworthy borrowers.

If your business can meet those kinds of qualifications, by all means, get your business line of credit from a traditional bank. You’ll probably get a stellar deal, especially if you do your business banking at the same financial institution. But for many small businesses, alternative lenders are the way to go—even if they cost a little more.

While we’ve been focusing on business lines of credit, we should mention that you can―in some circumstances―get a personal line of credit and use it for your business. But should you?

Well, that depends.

See, a personal line of credit can seem appealing because it has no time in business requirements or revenue requirements. So if you have a very young business (or you’re about to start one), you’ll have an easier time getting a personal line of credit than a business line of credit. Sounds good, right?

As you can probably guess, though, personal lines of credit have some cons you need to consider. For example, they often have higher credit requirements than many of the lenders on our rankings.

Plus, some personal lenders have restrictions on how you can use your borrowed funds, meaning you may not be able to use your personal line of credit on a business. And depending on the type of credit line you get, your personal LOC could come with a high-interest rate and expensive fees.

If you still think you want to use a personal line of credit to fund your business, we suggest you look for a home equity line of credit, or HELOC. These are secured lines of credit that use your home as collateral.

That means that you can get a larger line of credit than you could without collateral. It also means that you can qualify for a much lower interest rate. In fact, HELOC interest rates are often below 10%―making them comparable to rates on many business lines of credit.

Just make sure you borrow carefully. Since a HELOC uses your house as collateral, defaulting on your payments could mean you lose your home. To keep your home safe, borrow only as much as you need and make all your payments on time.

Many lenders offer lines of credit, but we believe Lendio has the best business line of credit for most small-business owners. That’s because its competitive lending marketplace approach lets you compare line of credit offers to find the best deal.

Of course, we found plenty of other solid lenders too. If you’re looking for the lowest rates, start with Bluevine. Or, if you’ve got a young business, Fundbox is your best bet. For businesses that plan to do more borrowing in the future, OnDeck offers some great perks. And if you prefer a monthly payment schedule, we recommend Kabbage.

So whatever your financing needs, we’re confident one of our recommended lenders will have the right line of credit for you.

Lines of credit are just one type of small-business lending available to you. Explore your other capital options with our rankings of the best small-business loans.

We researched dozens of business lenders and then used our standardized scoring system to grade their lines of credit on factors including credit limits, interest rates (or fees), customer reviews, and more. With the resulting scores, we created our rankings and lender reviews.

There aren’t any reliable stats about the average interest rate on a business line of credit interest rate, but most starting rates we see range from 4.5% to 10%. Keep in mind, though, that those rates are for the most-qualified borrowers. For riskier borrowers, rates can go up past 30%.

Business line of credit requirements will depend on what lender you go with. At a minimum, you’ll need a 560 personal credit score, $50,000 in revenue, and a business at least six months old.

To qualify for the best business lines of credit, you’ll want a credit score in the high 600s, over $100,000 in annual revenue, and a business over two years old.

If you meet the basic qualifications, you can apply for a business line of credit with the lender of your choice (we recommend the ones listed above). Lenders will need to see a bunch of information during the application process:

• Business information (including type, age, and EIN)
• Tax returns (personal and business)
• Bank statements
• Other financial statements
• Credit history (including your personal and business credit score)
• Business plan

The fees on a business line of credit vary by lender, but there are some standard fees to watch out for:

• Opening fee/origination fee
• Annual fee
• Maintenance fees (assessed monthly for unused lines)
• Cash advance fees
• Late payment fees

When you apply for a business line of credit, be sure to ask your lender about the fees accompanying your specific line. Unexpected costs are the last thing you want on a product that’s supposed to help your business finances.

Sure, some business LOCs are unsecured—that is, they don’t require specific collateral from borrowers. Pretty much all lenders will require a personal guarantee, though, even an unsecured business line of credit. Some lenders may also require a blanket lien on your business. Again, we advise you to ask your lender about its specific collateral policies.

(And if any of the terms in this answer confused you, take a look at our guide to unsecured business loans to learn more about personal guarantees and collateral.)

Disclaimer

At Business.org, our research is meant to offer general product and service recommendations. We don't guarantee that our suggestions will work best for each individual or business, so consider your unique needs when choosing products and services.