Business Line of Credit
A revolving limit you draw from as needed and only pay interest on what you use. The best all-purpose tool once you qualify.
Updated September 2026. Details vary by lender and change often; confirm terms with the provider.
How it works
A lender approves a limit, say $100,000. You draw $20,000 today, repay it weekly or monthly over 6–24 months, and the $20,000 becomes available again as you repay. Interest accrues only on the outstanding balance.
| Online lenders | Banks / credit unions | |
|---|---|---|
| Limit | $10k – $250k | $50k – $1M+ |
| Rate | 12% – 45% APR | Prime + 1–5% |
| Approval | 1–3 days | 2–6 weeks |
| Minimums | 6–12 months, $10k–$25k/mo revenue, 600+ credit | 2+ years, profitability, 680+ |
Why it beats an advance
The same $20,000 draw over 6 months on a 25% APR line costs about $1,500. A 1.30 factor advance costs $6,000. And the line is still there next time.
Getting approved
- Open the line before you need it. Lenders approve healthy businesses; they do not approve emergencies.
- Six months of clean bank statements matter more than a business plan. Avoid overdrafts and negative days.
- Start with an online lender at 6–12 months in business, then graduate to a bank line at 2 years with tax returns.
Watch for
- Rates quoted as “simple interest” per week rather than APR. Convert before comparing.
- Lines that are actually a series of fixed-term loans (each draw has its own amortization). Fine, but understand the schedule.
Frequently asked questions
Secured or unsecured?
Online lenders mostly offer unsecured lines up to $250k backed by a personal guarantee and a UCC lien on business assets. Banks offer larger, cheaper lines but usually want collateral, 2+ years of tax returns and 680+ credit.
Does an unused line cost anything?
Sometimes. Watch for draw fees (1–3% per draw), monthly maintenance fees and inactivity fees. Many online lines have none; ask.