What Is a Business Line of Credit?
A revolving credit facility that lets you borrow up to a set limit, repay it, and borrow again — similar to a credit card but with higher limits and lower rates. You only pay interest on what you use.
General Requirements
Time in Business
| Lender Type | Minimum Requirement |
|---|---|
| Traditional Banks | 2+ years |
| SBA Lenders | 2+ years |
| Online Lenders | 6 months – 1 year |
| Fintech / Alternative | 3–6 months |
Credit Score
| Score Range | Eligibility |
|---|---|
| 700+ | Best rates, traditional banks |
| 650–699 | Most online lenders, good terms |
| 600–649 | Limited options, higher rates |
| Below 600 | Very difficult; may need secured LOC |
Both personal and business credit scores are typically reviewed for small businesses.
Annual Revenue
| Lender Type | Minimum Annual Revenue |
|---|---|
| Traditional Banks | $250,000 – $500,000+ |
| SBA Lenders | $100,000+ |
| Online Lenders | $50,000 – $100,000 |
| Fintech / Alternative | $36,000 – $50,000 |
Documents Typically Required
Business Documents
Business license / registration
Articles of incorporation or LLC operating agreement
EIN (Employer Identification Number)
Business bank statements (last 3–12 months)
Business tax returns (last 1–3 years)
Financial Documents
Profit & loss statement (P&L)
Balance sheet
Accounts receivable / payable aging reports
Cash flow projections (for larger amounts)
Personal Documents
Personal tax returns (last 1–2 years)
Personal financial statement
Government-issued ID
Personal guarantee (almost always required for small businesses)
Credit Limits You Can Expect
| Business Stage | Typical Credit Line |
|---|---|
| Startup / Early stage | $5,000 – $25,000 |
| Established (1–2 yrs) | $25,000 – $100,000 |
| Mature (3+ yrs, strong revenue) | $100,000 – $500,000 |
| Bank / SBA LOC | $250,000 – $5M+ |
Types of Business Lines of Credit
Unsecured Line of Credit
No collateral required
Based on creditworthiness
Higher interest rates
Lower limits
Secured Line of Credit
Backed by collateral (inventory, equipment, receivables, real estate)
Lower interest rates
Higher limits
Easier to qualify with weaker credit
SBA CAPLines
Government-backed lines up to $5 million
Very competitive rates
Strict requirements (2+ years, strong credit, detailed docs)
Interest Rates & Fees
| Lender Type | Typical APR | Draw Fees |
|---|---|---|
| Traditional Banks | 7% – 15% | Low/none |
| SBA CAPLines | Prime + 2.25%–4.75% | Low |
| Online Lenders | 15% – 45% | 1%–3% per draw |
| Fintech / Alternative | 20% – 80%+ | Higher |
Other fees to watch for:
Annual maintenance fee ($100–$500)
Origination fee (0.5%–2%)
Inactivity fee (if unused)
Draw fee per withdrawal
Top Lenders for Small Business LOC
| Lender | Best For | Credit Limit |
|---|---|---|
| Chase | Established businesses | Up to $500K |
| Bank of America | Strong revenue businesses | Up to $250K |
| Wells Fargo | Businesses with existing relationship | Up to $150K |
| BlueVine | Fast online approval | Up to $250K |
| Fundbox | New/small businesses | Up to $150K |
| OnDeck | Fair credit borrowers | Up to $100K |
| Kabbage (AmEx) | Revenue-based approval | Up to $250K |
How to Improve Your Chances of Approval
Build your business credit score (Dun & Bradstreet, Experian Business)
Open a dedicated business bank account and keep it active
Maintain consistent monthly revenue (no large dips)
Pay all existing debt on time
Keep your debt-to-income ratio low
Avoid multiple loan applications in a short period
Build a relationship with a bank before applying
Secured vs. Unsecured — Quick Comparison
| Secured | Unsecured | |
|---|---|---|
| Collateral needed | Yes | No |
| Interest rate | Lower | Higher |
| Credit limit | Higher | Lower |
| Easier to qualify | ||
| Risk to assets |
When a Line of Credit Makes Sense
Managing cash flow gaps between invoices and payments
Buying seasonal inventory
Covering unexpected expenses or emergencies
Funding short-term growth opportunities
Paying payroll during slow periods