A business line of credit is a revolving credit facility — the most flexible form of small business financing. You’re approved for a maximum credit limit, draw what you need when you need it, and only pay interest on the amount you’ve drawn. As you repay, your available credit restores. For businesses with variable, ongoing cash flow needs, a line of credit is often a better fit than a lump-sum term loan.
How Business Line of Credit Work
Unlike a term loan, which disburses a fixed amount with a set repayment schedule, a business line of credit works more like a business credit card — but with much higher limits and lower rates. You draw funds via transfer to your business account, use them for whatever operational need arises, and repay on the lender’s schedule (typically monthly minimum interest payments, with principal as needed).
Lines of credit are either unsecured (based on creditworthiness alone, with a personal guarantee) or secured (backed by business assets, receivables, or inventory). Secured lines typically have higher limits and lower rates; unsecured lines are faster to access and require no collateral pledging.
Rates, Amounts & Terms
| Product Feature | Details |
|---|---|
| Amount | $5,000 – $500,000 |
| Rate Range | 8% – 35% APR (banks: 8–15%; online: 15–35%) |
| Draw Period | 12–36 months revolving; renews annually |
| Repayment | Monthly interest on drawn amount; repay principal to restore |
| Collateral | Unsecured up to ~$100K; secured above |
| Speed | 1–3 days to first draw after approval; approval 2–14 days |
Rates shown are typical market ranges. Actual rates vary by lender, creditworthiness, and business profile. Verify with lenders before applying.
Typical Qualification Requirements
| Requirement | Typical Minimum |
|---|---|
| Time in Business | 12 months (banks: 24+) |
| Monthly Revenue | $15,000+ |
| Credit Score | 620+ (alternative); 680+ (banks) |
| Annual Revenue | $180,000+ |
Best For
- Seasonal inventory buildups
- Unexpected operating expenses
- Payroll gaps between receivables
- Ongoing, variable working capital needs
- Emergency operational reserves
Not the Right Fit When
- One-time large purchases (term loan is more cost-effective)
- True startup with no revenue history (harder to qualify)
How to Apply
- Review the qualification requirements above. Confirm your time in business, monthly revenue, and credit score meet the minimums before applying.
- Prepare documents. Typically: 3–6 months bank statements, most recent tax returns (business and personal), and your business license. Some lenders require additional documents; the list is shorter for fast-funding products.
- Apply through our partner. Submit your information once, receive competing offers, and compare total repayment amount, APR, and payment structure before accepting.
Frequently Asked Questions
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Related: Working Capital Loans • Merchant Cash Advance • Term Loans • Sba Loans
Written by the SBLT Editorial Team. This content is informational only and does not constitute financial or legal advice.
Advertising Disclosure: Small Business Loans Today receives compensation when you click links to our partner financing site. Rates and terms shown are typical market ranges — verify with lenders before making financial decisions. Not financial advice.
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