Business owners often utilize small business lines of credit for working capital needs or to assist their business’ cash flow over a short period of time. The best small business lines of credit combine ease of access to capital, competitive interest rates, and offer the advantage of not requiring collateral. Based on these factors, we’ve identified the eight best small business lines of credit.
Business Line of Credit
Larger credit needs
Ability to make interest-only payments
Those with less than optimal credit
Those who want a fixed rate
Longer repayment terms
How We Determined the Best Small Business Lines of Credit
Our evaluation process for small business lines of credit considered rates, terms, credit score requirements, and quickness in funding as our primary factors. If a business has been established for at least two years and its owners have good personal credit, traditional lenders may provide better rates. However, many of the providers in our list offer lines of credit with a more expedited approval and funding process.
BlueVine: Best Overall Business Line of Credit
BlueVine’s application process is very simple and easy to use. Its approval time and funding speed are generally within one day, which gives businesses quick access to needed capital. Repayment terms can be monthly or weekly and can extend out to a year.
Note: Prior to COVID-19, BlueVine’s business line of credit was available for businesses that had been in business for just six months. At present, it requires businesses to be in operation for two years to qualify.
Why we like it: Out of the small business lines of credit available, BlueVine’s quick, efficient application process, along with flexible repayment terms upon approval, gives it an edge in a competitive market.
JPMorgan Chase: Best for Larger Credit Needs
JPMorgan Chase’s business line of credit is a terrific option for small business owners who need more access to capital on a short-term basis. With a maximum line of credit amount of $500,000, Chase offers the highest potential line of credit of any of the lenders on our list. For businesses that use their lines of credit frequently, the annual fee may be waived depending on your credit utilization over the course of the year.
Two disadvantages of getting a business line of credit through Chase are the lack of an online application and a lengthier approval process. However, Chase will fund businesses that have been in existence less than two years if other qualifications, such as credit score, can be met.
Why we like it: This is a great line of credit product for qualified borrowers.
TD Bank: Best for Interest Only Payments
TD Bank offers the ability to apply online for up to $100,000 in unsecured financing, with approval taking around five business days. TD is one of the few lenders to offer the ability to pay just the interest on a line of credit, which will help businesses that need some cash flow support in leaner revenue cycles.
One major disadvantage with TD is that applicants need to be located within TD Bank’s footprint of 16 states, mainly on the United States East Coast.
Why we like it: The option to make interest-only payments provides increased flexibility for small business owners.
Fundbox: Best for Newer Businesses
Fundbox is a good solution for newer businesses that only need a short period of time to repay the capital they borrow. Fundbox only requires a business owner to be in business for six months and have a minimum credit score of 600 for financing.
Fundbox’s repayment terms are shorter than many of the lenders we evaluated, with repayment terms capping out at 24 weeks. This means that your weekly payments would be several thousand dollars if you borrow the maximum amount.
Why we like it: Fundbox provides newer businesses the opportunity to get needed capital.
OnDeck: Best for Those With Less Than Optimal Credit
OnDeck’s line of credit offering is good for those who have been in business for a short period of time or have less than ideal credit. OnDeck only requires a business owner to be in operation for a year and will approve loans with credit scores as low as 600.
OnDeck’s line of credit includes a maintenance fee of $20 per month, and its lines of credit can have high interest rates that average more than 35% APR. However, you are only liable to pay interest on what is borrowed, and there is no penalty for early repayment.
Why we like it: OnDeck provides businesses with less-than-optimal credit the opportunity to get needed capital.
U.S. Bank: Best for Fixed Rate Lines of Credit
One of the perks of U.S. Bank’s small business line of credit is that you can lock in your interest rate on existing line balances, which can be advantageous if interest rates increase and you lock in before a rate hike kicks in. Also, lines of credit of more than $50,000 do not have an annual fee assessed. If your line of credit is less than $50,000, an annual fee of $150 applies.
U.S. Bank’s line of credit requires businesses to be in operation for two years, and its owners have a good credit score, which means newer businesses may need to pursue other options.
Why we like it: U.S. Bank offers customers the ability to lock in their interest rate when paying down their credit line balance.
SBG Funding: Best for Working Capital
SBG Funding offers lines of credit for businesses whose owners have credit scores as low as 500 or have been in business for as little as six months. SBG Funding is a good option for those businesses who need working capital and may not have ideal credit or may only have a few months in operation.
Why we like it: SBG Funding provides working capital to newer small businesses and to those businesses whose owners have less than ideal credit scores.
Headway Capital: Best for Longer Repayment Terms
Headway Capital lines of credit range from $5,000 to $100,000, which is sufficient for most small businesses needing capital for recurring expenses. Headway Capital also has low minimum requirements compared to other lenders. However, it also has some of the highest interest rates among lending providers. There is no stated minimum credit score with Headway as business performance is weighed in with the owner’s personal credit as part of the decision-making process.
Why we like it: Headway Capital is one of the few alternative lenders that offer repayment of up to 24 months on borrowed funds.
Alternative lenders are more likely than traditional leaders to approve you for a line of credit if your credit score is not great or if you are a newer business. However, you will pay a higher interest rate. Traditional lenders will provide lower rates but may not be very fast with giving you the funding you need. It’s important to shop around and see what the best option for your business is. Depending on qualifications and your business’ needs, any of these eight lenders are good choices.