Overview: The Best Business Credit Line for Good, Average & Bad Credit
In today’s competitive landscape, a loan for a business can be hard to come by. Even funding a small business poses challenges. That’s why many businesses today are turning to a business credit line. This option provides the flexibility that a business loan cannot.
If you need to buy inventory, cover a surprise expense or manage your cash flow, then a business line of credit is a good option. However, the process of securing a small business line of credit is not always straightforward. When looking to obtain a business line of credit, you may have questions, including:
- Can I get small online loans?
- Where do I turn for funding a small business?
- What are my options for a line of credit for business?
- What business funding sources are there for bad credit?
- Can I get unsecured business loans?
- Where can I get a small business line of credit?
When you are trying to get a business off the ground or keep your small business running smoothly, you will likely need to secure some type of loan for business or line of credit for business. However, it is not always easy to weed out the good business lines of credit from the bad. With a variety of business funding options out there, it is easy to become overwhelmed.
Throughout this year’s guide, we bring you tips for getting unsecured business loans and small business lines of credit as well as discussing options for funding a small business. If you are wondering whether small online loans or unsecured business loans are a better option or where the best place to get a business credit line is, look no further than our guide.
What Do You Know About a Line of Credit for Business?
There are so many different options for business funding, but the most common method that owners employ is a business credit line. A business line of credit gives you capital to draw from to meet various business needs. You can pay off debts, buy inventory, adjust for seasonal cash flow gaps or just get more working capital. Essentially, a business credit line is suitable for a wide range of business needs.
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You will see astronomical interest rates for small online loans, whether you have good or bad credit. That is why a loan for business shouldn’t be where you concentrate your efforts – the best place to secure business funding is through a business line of credit.
A business credit line is similar to a personal credit line such as a credit card. A lender or bank will give you access to a certain amount of funds that you can draw from whenever you need. You then repay, with interest, the funds that you borrowed from the credit line.
The advantages to a small business line of credit are that you will only pay interest on the funds that you draw, unlike when you take out a loan for business. The capital is also available when you need it, and you can use it for whatever business needs you may have. Bad credit is also accepted for a business line of credit, and this is a great way to build up your credit score over time. However, you may be required to put up collateral for a secured line of credit, and those with poor credit scores may see higher interest rates for a small business line of credit.
Overall, business lines of credit are a great way to get some extra cash when you need to it to keep your business operations flowing smoothly.
What to Consider When Looking for a Business Line of Credit
When you begin looking for a business line of credit, there are several things that you need to consider. Not every lender or institution that offers you a business credit line is credible, and, sometimes, the terms and rates attached to them are outrageous. When determining whether you are being offered a good business line of credit, consider the following:
The lender reputation is important to look at. Make sure that the lender you are considering for your business line of credit has a record of accomplishment that is well proven. If you are in doubt or if it seems too good to be true, that might be the case, and you should consider another source.
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Credit Score, Time in Business & Revenue Requirements
You also need to look at the lender’s minimum credit requirements before applying for a small business line of credit. Some lenders also want to see that you have been in business for a certain amount of time and that your revenue streams meet a certain threshold. Lenders do not like taking risks, so they will only offer you a business line of credit if you have a high enough credit score and if you can prove that your business is stable and profitable.
APR & Fees
Annual percentage rates and fees are perhaps the most important thing to consider. Better lenders will have business credit line interest rates that are more competitive with fewer fees. However, if you have lower credit, you will find yourself paying higher interest rates. Be sure to calculate the total cost of the money you are borrowing to ensure that you can actually afford to take out a business line of credit.
Funding Limits & Convenience
You will also want to see if the lender’s funding limits line up with your business needs. If you need a small business line of credit of $100,000 but a lender only offers a maximum business credit line of $50,000, he or she isn’t a good option for you. It is also important to be aware of the waiting period before you receive the funds. Some online lenders offer a business line of credit within 24 hours while others will take a few days to even a week.
Finally, you will want to look at the repayment terms for a business line of credit. Repayment of the business credit line can range from weekly, monthly, yearly, and anywhere in between. It is important to find a business credit line with terms that will fit with your business cash flow.
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The Best Business Lines of Credit
When you are looking for a business line of credit, there are many options to consider. Lenders look at your credit score, your time in business, and the annual revenue that your business pulls in when determining whether they will offer you a business line of credit. Taking into account the items listed above, we have come up with the best business credit line based on your credit score and business type.
1. Best Small Business Line of Credit for Average Credit
If your company is relatively new and you are not looking for a large line of credit, then BlueVine is a good option for you. The minimum credit score required is 600, which falls on the lower end of the spectrum. You will also need to have been in business for at least six months and have a minimum annual revenue of $60,000 to qualify for its small business line of credit.
This is a great option for small or newer businesses. If you meet the requirements, BlueVine can offer you a small business line of credit of $50,000, and you can generally be approved and funded within 24 hours. The loans will be repaid over 6 months with weekly payments. While people with average credit can qualify, it is better to apply with a higher credit score as the APRs can range from 16% to 62%.
2. Best Business Line of Credit for Bad Credit
If you have bad credit, there are two options for obtaining a business line of credit: Kabbage and OnDeck. Both offer up to $100,000 on a business credit line, but their requirements and APR terms vary.
If you have atrocious credit, rest assured that Kabbage has no minimum credit score limit and can fund your business credit line within minutes. It also only requires you to have been in business for a year, with $50,000 in annual revenue. This is a good option for a small business credit line for newer business owners with poor credit. However, Kabbage hedges its bets by charging lofty interest rates between 32% and 108%.
If you have a credit score over 500 and have $100,000 in annual revenue, you will want to go with OnDeck over Kabbage. This option requires you to be in business for at least a year and offers significantly lower APRs – 14% to 40%. It will usually take a few days for your business credit line to be approved and funded though, and you will repay the balance weekly. In addition, there is a $20 monthly maintenance fee, but it will be waived if you borrow $5,000 within five days of opening your account.
3. Best Business Line of Credit for Average Credit
If you have been in business for over a year, have a credit score over 600, and need less than a $100,000 business credit line, then StreetShares is the best option for you. Any one that has been in business for over 1 year and draws a minimum annual revenue of $25,000 is eligible for its small business line of credit.
Its loan terms stretch between 6 and 36 months, and you will be required to repay it on a weekly basis. With APRs between 9 and 40% and funding time that takes 1 to 5 days, this is a good option if you don’t need your business line of credit right away. It is also important to note that, while you can borrow up to $100,000, you can only secure a small business credit line for an amount up to 20% of your annual revenue. That means that your annual revenue will need to be $500,000 to get the maximum $100,000 small business line of credit.
If you are a lower revenue business that needs to borrow close to $100,000, then LendingClub might be a better option.
4. Best Large Business Credit Line for Established Businesses
LendingClub is a good option for more established businesses that are looking for a business line of credit. With a credit score over 600, annual revenue over $75,000, and a time in business of over 2 years, you have access to a business credit line between $5,000 and $300,000. However, any business line of credit over $100,000 will require collateral.
LendingClub has competitive interest rates, which range from 8% to 32%. However, there is a 1% to 2% draw fee every time that you pull from your business line of credit. Since it is account maintenance “fee free,” it’s a good option for a business credit line if you might need cash quickly due to an emergency.
5. Best Business Line of Credit for Large Inventory Purchases
If you buy inventory regularly, then Dealstruck might be a good fit for your business. With a credit score over 600 and $150,000 annual revenue, you can have access to a $500,000 business line of credit to purchase inventory.
This $500,000 comes with interest rates between 19% and 31% and loan terms of 6 months per draw. You will need to repay the loan in weekly installments, but this is a great option if you need upfront credit to make large inventory purchases. The funding time averages about 10 days, so you will need to plan ahead if you think you may be short on money to purchase more inventories.
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Conclusion: Getting the Best Business Line of Credit for Your Credit Score and Business Type
There are many options for funding a small business: you can take a bank loan for business, secure small online loans or a get a business line of credit. When looking to secure a small business line of credit, there are many variables and lenders that you will need to consider.
Finding the right business line of credit for you is not always an easy task. Even after hours of research, you may still be no closer to making a decision. That is why we have put together a chart of the best small business lines of credit for your credit score and business type, allowing you to compare lenders and determine which small business line of credit is best for you.
Credit Score Min.
Annual Revenue Min.
Time in Business
Annual % Rate
|BlueVine||600||$60,000||6+ months||Up to $50,000||16-62%|
|OnDeck||500||$100,000||1+ years||Up to $100,000||14-40%|
|LendingClub||600||$75,000||2+ years||$5,000 to $300,000||8-32%|
|Dealstruck||600||$150,000||1+ years||Up to $500,000||19-31%|
The best line of credit for business will not be the same for everyone – carefully review the information in this article to determine which credit line option will benefit you most before making your decision.
AdvisoryHQ (AHQ) Disclaimer: Reasonable efforts have been made by AdvisoryHQ to present accurate information, however all info is presented without warranty. Review AdvisoryHQ’s Terms for details. Also review each firm’s site for the most updated data, rates and info. Note: Firms and products, including the one(s) reviewed above, may be AdvisoryHQ's affiliates. Click to view AdvisoryHQ's advertiser disclosures.
AdvisoryHQ (AHQ) Disclaimer:
Reasonable efforts have been made by AdvisoryHQ to present accurate information, however all info is presented without warranty. Review AdvisoryHQ’s Terms for details. Also review each firm’s site for the most updated data, rates and info.
Note: Firms and products, including the one(s) reviewed above, may be AdvisoryHQ's affiliates. Click to view AdvisoryHQ's advertiser disclosures.