What is a business line of credit?

A business line of credit is a flexible financing tool where a lender approves you for a maximum credit limit — say $100,000 — and you draw funds as needed, repay, and draw again. You pay interest only on the outstanding balance, not the full limit. It works like a business credit card but usually with lower rates and higher limits.

What credit score is needed for a business line of credit?

Most traditional banks require 680+ personal credit for a business line of credit. Online lenders like Bluevine accept 625+, Fundbox accepts 600+, and American Express requires 660+. For secured lines of credit backed by collateral, some lenders go lower. Business credit history and annual revenue matter as much as personal credit score.

What is the average interest rate on a business line of credit?

Business line of credit rates range from 8% to 60% APR depending on the lender and your creditworthiness. Bank lines of credit for well-qualified borrowers run 8%–18%. Online lenders charge 15%–45%. Rates are typically variable, tied to the prime rate or Wall Street Journal Prime. The best rates go to established businesses with strong cash flow and credit.

What is the difference between a revolving and non-revolving line of credit?

A revolving line of credit replenishes as you repay — you can draw, repay, and draw again repeatedly throughout the draw period, like a credit card. A non-revolving line lets you draw once (or in multiple draws), but once you repay the balance, the line closes. Most business lines of credit are revolving. Non-revolving lines are less common and typically used for project-specific financing.

Business Line of Credit 2026 — Best Lenders, Rates, and How It Works

A business line of credit gives you a pool of money to draw from when you need it — and you only pay interest on what you actually use. Most businesses use lines of credit for working capital: covering payroll between receivables, buying seasonal inventory, or handling unexpected expenses without taking a term loan. Here’s what they cost, who offers them, and when they make more sense than a term loan.

Best Business Lines of Credit in 2026

Lender	Credit Limit	APR	Min. Credit	Min. Time in Business	Best For
Bluevine	Up to $250,000	7.8%–50%	625	24 months	Best overall for established businesses
American Express Business Line	Up to $250,000	3%–27% monthly fee	660	12 months	Amex cardholders, flexible repayment
Fundbox	Up to $150,000	4.66%–8.99% per 12 weeks	600	6 months	Easiest approval, smallest businesses
OnDeck	Up to $100,000	35.9%–60%+	625	12 months	Fast funding, fair credit
Wells Fargo BusinessLine	Up to $150,000	Prime + 1.75%–9.75%	680	2+ years	Existing Wells Fargo customers
Bank of America Business Advantage	Up to $100,000	Prime + 2.0%–4.75%	700	2+ years	BofA relationship customers
US Bank Business Cash Flow Manager	Up to $250,000	Prime + 2.99%+	680	2+ years	Multi-state businesses

APRs are estimates; final rates depend on creditworthiness, revenue, and time in business.

How a Business Line of Credit Works — Step by Step

Apply and get approved for a maximum credit limit (e.g., $75,000)
Draw funds as needed — transfer to your business checking account through an online portal or mobile app
Use the funds for whatever business purpose you need
Repay on a schedule — weekly, bi-weekly, or monthly depending on the lender
Redraw as your balance replenishes (revolving lines only)
Pay interest only on the outstanding balance, not the full $75,000 limit

Example: You have a $75,000 line. You draw $20,000 in January for inventory. You pay interest on $20,000. By March, you’ve repaid $15,000 — now $70,000 is available again. You draw $30,000 for a seasonal push. You pay interest on the $35,000 outstanding balance ($5,000 + $30,000).

Revolving vs. Non-Revolving Lines

	Revolving	Non-Revolving
Reuse after repayment	✅ Yes	❌ No
Draw period	Ongoing (annual renewal)	Fixed (one draw or multiple, then closes)
Common with	Most online lenders and banks	Some SBA CAPLines
Best for	Ongoing working capital needs	Specific project with known cost

Almost all business lines of credit from banks and online lenders are revolving. The SBA’s CAPLine program (a working capital line under the 7(a) umbrella) offers both.

Business Line of Credit vs. Term Loan

	Line of Credit	Term Loan
Disbursement	Draw as needed	Lump sum
Interest	On outstanding balance only	On full loan amount
Repayment	Flexible (repay and redraw)	Fixed schedule
Best for	Recurring working capital needs	One-time expenses with defined cost
Rate	Usually variable	Fixed or variable
Amount	$10K–$250K (online); up to $1M+ (banks)	$5K–$5M+

Choose a line of credit when: You have recurring needs (cash flow gaps, inventory, payroll) that vary month to month. Choose a term loan when: You’re making a specific capital purchase with a known cost (equipment, renovation, acquisition).

How to Qualify for a Business Line of Credit

Minimum requirements across most lenders:

Personal credit score: 600–680+ depending on lender
Time in business: 6 months minimum (online lenders); 2 years (banks)
Annual revenue: $100,000+ (online lenders); $250,000+ (banks)
Cash flow: Consistent monthly deposits — lenders analyze 3–6 months of bank statements

Documents typically required:

Business bank statements (3–6 months)
Business tax returns (1–2 years)
Personal tax returns
Basic business information (EIN, formation documents)

Online lenders like Fundbox can approve in 24 hours using bank statement analysis alone — no tax returns required for lines under $150,000.

Secured vs. Unsecured Lines of Credit

Unsecured: No specific collateral required. The lender takes a blanket lien (UCC-1 filing) on business assets as general security. Most online business lines of credit are technically unsecured but include a personal guarantee from owners.

Secured: Backed by specific collateral — real estate, inventory, or accounts receivable. Banks offer secured lines (called “asset-based lending” at larger amounts) at lower rates.

An SBA CAPLine is a government-backed working capital line — it can be secured or unsecured depending on collateral availability, with the SBA guarantee providing the lender’s security.

Fees to Watch For

Beyond the interest rate, look for:

Draw fee: 0%–2% each time you draw funds (Fundbox charges none; some lenders charge 1%–2%)
Origination/maintenance fee: Annual fee for keeping the line open ($150–$500/year)
Inactivity fee: If you don’t use the line for a certain period
Prepayment penalty: Rare on lines of credit, but verify

When a Business Line of Credit Is the Wrong Choice

Lines of credit are often misused. Avoid using a line for:

Long-term capital investments — use a term loan or equipment financing; drawing a line of credit for a 5-year asset and cycling the balance creates expensive revolving debt
Covering consistent losses — if you’re drawing the line every month just to cover expenses, the underlying problem is the business model, not cash flow timing
Down payments on SBA loans — SBA rules prohibit using borrowed funds as the equity injection

Written by WealthVieu

WealthVieu researches and writes data-driven personal finance guides using primary sources including the IRS, Bureau of Labor Statistics, Federal Reserve, and Census Bureau.

The content on Wealthvieu is for informational purposes only and should not be considered financial, tax, or investment advice. Consult a qualified professional before making financial decisions. Full disclaimer · Editorial policy