Best business lines of credit for startups

Cash flow is one of the biggest challenges new businesses face. From covering payroll and restocking inventory to investing in growth, many new businesses need extra capital to keep operations running smoothly.

For a startup, business lines of credit offer a flexible, accessible way to manage those ups and downs. Unlike a traditional term loan, a business line of credit gives you ongoing access to funds. You borrow what you need when you need it, and you only pay interest on what you use.

We explain how business lines of credit work, when they make sense for new businesses, and the top lenders for startups that need flexible funding.

What is a business line of credit?

A business line of credit is a flexible funding option that provides access to a set amount of capital you can draw from as needed. You only pay interest on the amount you use. As you repay what you borrow, your available credit is restored, making it a practical option for managing short-term expenses or bridging cash flow gaps.

How does a business line of credit work?

A business line of credit functions much like a business credit card. You’re approved for a set credit limit, and you can draw funds as needed. As you make repayments, your available credit is replenished, giving you ongoing access to capital.

For example, say your startup secures a $10,000 revolving line of credit, and you use $5,000 to buy a piece of equipment. After you repay that $5,000 purchase according to the terms of your lender agreement, your available credit will go back up to the full $10,000 limit.

Most lines of credit don’t carry pre-payment penalties, so you can pay down your balance early without extra fees. This makes them a flexible solution for managing working capital based on your business’s cash flow.

Types of business lines of credit

Business lines of credit generally fall into one of two categories:

1. Secured line of credit: A secured line of credit is backed by collateral, such as real estate, equipment, or other business assets. If the borrower defaults, the lender can claim the assets to recover losses.
2. Unsecured line of credit: An unsecured line of credit isn’t tied to specific collateral. The lender has no right to property or assets should the borrower fail to meet their repayment obligations.

Pros and cons of a business line of credit for startups

A business line of credit can be a powerful financial tool. However, like any funding option, it’s important to weigh the benefits and potential drawbacks before applying.

Pros

• Flexible repayment: You can repay the balance over time through manageable monthly payments and reuse the credit as you pay it down
• Multiple lender options: Traditional banks, credit unions, and online lenders all offer credit lines, giving you a wide range of providers and terms to choose from
• On-demand capital: A business line of credit gives you access to capital when you need it. As long as you stay within your credit limit, you can access funds whenever you need them.

Cons

• Potentially high costs: Lines of credit often carry higher interest rates than term loans, alongside the potential for annual fees, draw fees, maintenance fees, and origination fees. Read fee disclosures carefully and look for options with lower interest rates and fees.
• Credit and collateral requirements: You typically need strong personal or business credit to qualify. Some lenders may also require collateral, especially for larger credit lines.
• Not ideal for lump sum purchases: If you're making a significant investment, such as buying equipment or real estate, a term loan may offer better rates and structured repayment terms

What are the requirements for a business line of credit?

Qualifying for a business line of credit typically depends on a few key factors. Lenders use these to assess your risk level and determine how much they’re willing to offer, and at what cost:

• Credit score: Most lenders require a personal credit score of at least 670, though some online lenders may accept lower scores. If you have no business credit score or bad personal credit, it may be wise to work on your creditworthiness before applying.
• Time in business: Traditional lenders typically require at least 1–2 years of operating history. If your business is relatively new, you may still qualify through online lenders, but expect to pay higher interest rates or face stricter terms.
• Monthly or annual revenue: Monthly or annual revenue requirements vary by lender, but traditional banks typically require at least $100,000 in annual income. Online lenders may have more lenient revenue requirements.

Best business lines of credit for startups

If a business line of credit feels like the right fit for your startup, here are some top providers to consider:

1. Bluevine Business Line of Credit

• Credit limit range: Up to $250,000
• Interest rates: Starting at 7.8%
• Minimum credit score: 625

Pros

• Potential for a low interest rate for qualifying customers
• Lower credit score requirement
• High maximum credit limit
• No annual fee or draw fees

Cons

• May require a personal guarantee
• Maximum interest rate not publicly available
• Features monthly revenue requirements rather than annual

Bluevine offers business lines of credit with interest rates starting at just 7.8%. There are no account maintenance fees, making it a popular option for startups looking to minimize the impact of interest and other added charges.

You don’t need perfect credit to qualify. You can get approved with a credit score of 625 and higher, though you need 1 year in business and $10,000 in monthly revenue. Bluevine also offers a higher maximum credit line of $250,000.

Other perks include instant access to funds when you have a Bluevine Business Checking account, and those on 6- or 12-month repayment plans while holding the checking account may qualify for a rate discount.

2. OnDeck Business Line of Credit

• Credit limit range: $6,000–$100,000
• Interest rates: Average rate of 57.1% APR
• Minimum credit score: 625

Pros

• Lower credit score requirement
• No annual fee or draw fees
• No prepayment penalty

Cons

• Interest rate ranges not publicly available; high average interest rate advertised
• Lower maximum credit limit given the average interest rate

OnDeck is a popular online lender that’s known for less strict credit score requirements and reasonable repayment terms. Though the average interest rate is 57.1% for a line of credit, you can get approved with a credit score as low as 625. You also need 1 year in business, a business checking account, and at least $100,000 in annual revenue.

With OnDeck, you can borrow between $6,000 and $100,000, and you can choose between repayment terms of 12, 18, or 24 months. Similar to Bluevine, you can get instant access to your funds when you make a draw.

3. Bank of America Unsecured Business Line of Credit

• Credit limit range: Starting at $10,000
• Interest rates: Starting at 9.25%
• Minimum credit score: 700

Pros

• Low starting interest rate
• No origination fee or cash advance fees
• Interest rate discounts available as a Preferred Rewards for Business member

Cons

• Higher personal credit score requirement
• $150 annual fee
• Line of credit typically available for 1 year; renewal options may be offered
• Maximum interest rate not publicly available

Bank of America offers a wide range of business lending products, including secured and unsecured business lines of credit. Unsecured credit lines start at $10,000 with interest rates as low as 9.25%, though you’ll likely need a personal credit score above 700 on the FICO scale, $100,000 in annual revenue, and two years in business.

Secured business lines of credit, which require collateral, start at $25,000 with slightly lower starting interest rates of 8.5%. Similar to the unsecured line, you’ll need two years of history in business but a higher $250,000 minimum in annual revenue.

4. PNC Bank Unsecured Small Business Line of Credit

• Credit limit range: $20,000–$100,000
• Interest rates: Variable, based on the Prime Rate
• Minimum credit score: Not disclosed

Pros

• Doesn’t require collateral
• 1.0% interest rate discount for those who qualify
• Overdraft protection available

Cons

• $175 annual fee
• Personal guarantee required
• Interest rates not publicly available

PNC Bank offers unsecured business lines of credit between $20,000 and $100,000, with no collateral needed to secure your funding. You generally need at least two years in business to qualify, but PNC notes that options may be available for newer businesses.

You may also qualify for 1.0% off standard interest rates if your startup is located in a low- to moderate-income area. If you have non-real estate assets you can offer as collateral, though, you can access credit lines over $100,000 with PNC’s secured small business line of credit.

5. Wells Fargo Small Business Advantage

• Credit limit range: $5,000–$50,000
• Interest rates: Prime Rate + 4.50%
• Minimum credit score: 680

Pros

• Low on fees (no annual fee, ATM fees, over-the-counter transaction fees)
• Doesn’t require collateral
• Access to perks like a rewards program and overdraft protection

Cons

• Lower maximum credit line
• Must provide a personal guarantee
• Each owner must have less than $500,000 in personal liquid assets to qualify

The Wells Fargo Small Business Advantage offers new, small startups an unsecured line of credit, so long as each owner has less than $500,000 in liquid assets. This financing option is low on fees and offers five years of revolving credit.

If you’ve been in business for two or more years and are looking for lower rates and higher credit limits, Wells Fargo also offers a BusinessLine option with credit limits up to $150,000.

6. American Express Business Line of Credit (Installment Loan)

• Credit limit range: $2,000–$250,000
• Interest rates: 3%–27% monthly fee
• Minimum credit score: 660

Pros

• High maximum credit limit; some businesses may qualify for an even higher limit
• No annual fee, origination fees, prepayment fees, or draw fees
• Slightly lower minimum credit score requirement

Cons

• Requires a personal guarantee
• Up to a $100 late monthly payment fee
• Requires average monthly revenue of $3,000 or more, rather than annual

American Express offers a business line of credit of up to $250,000. To qualify, startups must be in business for at least 1 year and generate upwards of $3,000 in monthly revenue.

Each draw from the credit works like a short-term loan (you’ll select a 6, 12, 18, or 24-month term) and carries a flat monthly fee that increases with the term length. In other words, you can keep costs lower with fast repayment.

Beyond the lack of common fees charged by lenders, American Express offers a quick application process and same-day funding after approval.

7. Fundible Business Line of Credit

• Credit limit range: $1,000–$250,000
• Interest rates: Fixed monthly percentage starting at 1.00%
• Minimum credit score: 500

Pros

• Very low minimum credit score requirement
• Only requires 6 months in business
• No prepayment penalties

Cons

• Requires $8,000 in monthly revenue, not annual
• Lack of public information around fees
• Maximum interest rate not publicly available

A business line of credit from Fundible may be a good option for startup owners with lower credit scores who haven’t been in business for at least 1 year. Fundible requires a minimum credit score of 500, and you only need to be in business for 6 months to qualify.

Each time you draw from your line of credit, Fundible bundles your existing balance with the new draw into a new term. Fundible features the same maximum credit limit as American Express, though you need a higher monthly revenue (at least $8,000) to qualify. Similar to American Express, Fundible also offers same-day approval and funding.

Current interest rates for business lines of credit

Here’s a roundup of what leading lenders are charging to help you get a better idea of what to expect.

Is a business line of credit right for your startup?

A business line of credit for new business can be a smart, flexible way to manage expenses, but it’s not the right fit for every situation. Before applying, it’s important to understand when this type of funding makes sense for your startup and when another option might be a better choice.

When a business line of credit makes sense

The purpose of a business line of credit is to provide access to short-term working capital. This is a good choice in certain scenarios, including:

• You want to fund short-term projects: For example, if you have marketing or contract costs that will generate revenue in a few months, you can draw the funds you need to pay down projects as you go
• You want to bridge cash flow gaps: You can use a business line of credit to pay your business’s bills now and pay it back when payments come in
• You need savings for periodic expenses: If your business has infrequent, recurring expenses you need cash for, you can have a credit line ready without draining funds or waiting on approval

When a business line of credit doesn't make sense

Although a business line of credit may seem like the perfect option if you need funding, it can hinder your startup’s growth if used unwisely. In some cases, a business line of credit just doesn’t make sense, including:

• You need to make a one-time purchase: If you’re making a large, one-time purchase, you’ll likely be better served with a business term loan that offers lower interest rates and fees with fixed monthly payments
• You don’t have great credit and can’t access reasonable rates: If you can’t secure a line of credit with reasonable interest rates and terms, consider options such as crowdfunding, revenue-based financing, or business grants

How to get a business line of credit

If you’re ready to apply for a business line of credit, here are the key steps to help you prepare and move through the process smoothly:

1. Review your qualifications

Take note of your credit scores. Most lenders require a personal credit score of at least 670 if your business is new. You should also know your startup’s annual revenue, time in business, and whether you have any collateral to offer.

2. Gather your documents

Make sure you have the following documentation in order to speed up the review process:

• Tax returns: The lender may want to look at your business and personal tax returns for the past 3 years as part of the qualifying process
• Bank statements: Your lender will likely want to take a look at your business bank account to ensure you can afford the loan
• Articles of incorporation: The lender will use your articles of incorporation to verify the age and legitimacy of your business
• Collateral documents: You may need to provide documents related to real estate or other collateral you plan to use

3. Compare lenders

Compare business lines of credit lenders based on approval requirements, borrowing limits, interest rates, and lender reviews. If you need cash fast, consider funding speed as well. Newer businesses may want to consider online lenders or fintech providers for more flexible terms.

4. Fill out and submit your application

Once you've found a lender that fits your needs and you're confident you meet the requirements, complete the application and upload the necessary documents. From there, approval timelines can vary. Some lenders respond within hours, while others may take a few business days.

Ramp: An alternative to business lines of credit for startups

If a business line of credit isn’t the right fit for your startup, the Ramp Business Credit Card offers a flexible, fee-free alternative.

Ramp gives you access to the spending power your business needs with no personal credit checks, no personal guarantee, and no annual fee. Plus, you’ll pay off your full balance each month, helping you avoid interest entirely.

Applicants get approved for Ramp's Business Credit Card in less than 2 days, with credit limits up to 30x higher than traditional business credit cards. You also get access to more than $350,000 in exclusive partner rewards and perks from vendors like AWS, Notion, and OpenAI.

Ready to learn more? Try an interactive demo and see why 40,000+ businesses choose Ramp to fund their business expenses.