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Loan Type
Business Loan
Monthly Revenue
$20K-$30K
Time In Business
2 or more years
Credit Score
Good (690-719)
1
Fast Turnaround
9.6
ExceptionalBestMoneyscore
Popularity
Based on visits in the past 7 days
10.0
Brand Reputation
Based on web trends
9.4
Biz2Credit
Fast business funding solutions
Apply online in minutes
Fast approval and funding for revenue-based financing
Increased chance of approval for businesses with annual revenue above $250K
923 businessesvisited this site today
15,367Reviews
More Details:
Loan Amount
$50K - $2M
Time In Business
12+ months
Monthly Revenue
$10K+
Min. Credit Score
650
2
9.4
ExcellentBestMoneyscore
Popularity
Based on visits in the past 7 days
9.0
Brand Reputation
Based on web trends
10.0
SoFi Business Loans Marketplace
Find small business funding in 3 easy steps
Search options with no hard credit check*
As soon as the same day funding**
9,700Reviews
More Details:
Loan Amount
$5K-$2M
Time In Business
12+ months
Monthly Revenue
$10K+
Min. Credit Score
680
3
8.9
GreatBestMoneyscore
Popularity
Based on visits in the past 7 days
8.7
Brand Reputation
Based on web trends
9.4
OnDeck
Small business financing made simple
Get funding as soon as the same day
Flexible repayment options
4,790Reviews
More Details:
Loan Amount
$5K-$250K
Time In Business
1+ years
Monthly Revenue
$8.5K+
Min. Credit Score
625
4
8.9
GreatBestMoneyscore
Popularity
Based on visits in the past 7 days
8.6
Brand Reputation
Based on web trends
9.5
Lendio
One-stop shop for business financing
Funding in as little as 24 hours
Over 300K businesses funded
21,556Reviews
More Details:
Loan Amount
$5K-$2M
Time In Business
1+ years
Monthly Revenue
$12K+
Min. Credit Score
580
5
8.7
GreatBestMoneyscore
Popularity
Based on visits in the past 7 days
8.4
Brand Reputation
Based on web trends
9.3
Fundera
Easy and fast business loan options
Get prequalified as fast as 4 minutes
Over 85K small businesses funded
986Reviews
More Details:
Loan Amount
$5K-$5M
Time In Business
1+ years
Monthly Revenue
$10K+
Min. Credit Score
580
6
8.6
GreatBestMoneyscore
Popularity
Based on visits in the past 7 days
8.3
Brand Reputation
Based on web trends
9.1
Revenued
Get a funding decision in as little as an hour
No annual fee, no draw fee, no application fee
Revolving flex line, similar to a line of credit
971Reviews
More Details:
Loan Amount
$5K-$1M
Time In Business
1+ year
Monthly Revenue
$20K+
Min. Credit Score
None
11,637 visitors
connected with a lender in the past week
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Most Popular on BestMoney
9.6
BestMoneyscore
Popularity
Based on visits in the past 7 days
10.0
Brand Reputation
Based on web trends
9.4
Biz2Credit
Fast business funding solutions
Apply online in minutes
Fast approval and funding for revenue-based financing
Increased chance of approval for businesses with annual revenue above $250K
Minimum Credit Score: 650
Loan Amount: $50K - $2M
923 businessesvisited this site today
Line of Credit Loans: What You Need to Know
When your company needs cash to cover impending expenses, you don’t have time to wade through the business loan application process. Having a line of credit for your business in place provides access to a guaranteed amount of money any time you need it so that you never find yourself in a financial bind.
If you routinely require small amounts of money to keep your business going rather than large lump sums for occasional expensive purchases, a business line of credit could be right for you.
Lines of Credit vs. Business Loans
There are many types of business loans, but a line of credit is somewhat different. The choice between applying for a business loan or a line of credit loan depends on how much cash you need and what you intend to use it for. Business loans typically:
- Provide one-time lump sum payments
- Require repayment at a fixed business loan rate
- Have stable, predictable monthly payments
- Include closing costs or early repayment penalties
Lines of credit, on the other hand, are similar to credit cards in the way the money is accessed. If you qualify for this type of loan, you can expect:
- A set amount of money to borrow against
- Flexibility to borrow as much as you need at any time
- Monthly payments calculated based on how much was borrowed
- Variable interest rates lower than the prime rate
- A draw fee for borrowing against the credit line
- Few or no closing costs
Both loan types require good cash flow, a solid credit score, and a strong financial standing.
When to Use a Line of Credit
Certain businesses, such as retail establishments, benefit more from lines of credit because of the predictable variations in cash flow. Seasonal changes in sales mean earnings fluctuate on a set schedule, and extra money is often needed to continue operations during slow times. When you’re able to anticipate these financial needs, you can rely on a line of credit to provide security.
A line of credit is also useful when:
- You require a short-term boost in working capital
- You’re unable to meet a payroll deadline Inventory needs to be increased or replenished
- You need to cover expenses associated with hiring new employees
- Marketing efforts need to be increased in anticipation of a special event
These types of expenses may not be specific or concrete enough to allow you to qualify for a regular business loan. However, since line of credit loans are given based on financial standing rather than a specific spending plan, you can still get the funds your business requires.
Applying for a Line of Credit: The Basics
Like a business loan, a line of credit may be secured or unsecured. Secured credit lines need collateral to back them up. Unsecured lines are guaranteed by your business and require more trust on the part of the lender. In both cases, you’re at risk of loss should you be unable to make payments. The lender will either take possession of your collateral or have the choice to sue you for what you owe.
To avoid these problems, work to build up a good credit score for your business and yourself. Have a dedicated business bank account, and stay on top of all your payments. Keep detailed records of cash flow, profit and loss, accounts payable and receivable, revenue streams, assets, and income. Most lenders will want to see this information when deciding whether or not to extend a line of credit to your business.
When applying, ask about any fees associated with the credit line. There may be fees for borrowing money or maintaining the account when you haven’t borrowed for a length of time. Make sure you understand the current business line of credit rates and the payment structure so that you can continue to practice good credit management.
Benefits of a Business Line of Credit
You may wonder why it’s worth the effort to go through the application process for a line of credit when a credit card offers similar borrowing options. However, credit cards can hit you with fees and penalties subject to change with little warning. Interest on a line of credit is often lower, and making regular payments also builds up your credit rating.
When compared to some of the best business loan providers, the monthly payments on a credit line tend to be smaller, and you don’t have to worry about the money “running out” when you need it most. Instead, you have a set credit limit to draw from for the duration of the loan term. As long as you’re diligent about paying off what you borrow, you won’t be saddled with the specter of long-term debt.
Choosing the Best Line of Credit Provider: Factors to Consider
Traditional brick and mortar banks are one source of funding for businesses, however, they may not always be a viable option for every business. Online lenders provide a simplified path to receiving a line of credit and often are willing to give funds to those who may not be approved by banks. In addition, online lenders often provide funds much quicker than traditional banks. When choosing a lender, or lending platform, to provide you with a business line of credit, there are several key factors to consider.
1. Reputation
While traditional banks come with a reputation built in, you may not be as familiar with the leading online lenders. However, this does not mean that such lenders don't have reputations as solid as banks do—you simply have to do some research or check with the experts to make sure they have a track record of providing reliable service. Look for an A+ rating with the Better Business Bureau to ensure that the lender is worthy of your business.
2. Minimum Credit Requirements
Various lenders are willing to take on differing levels of risk. You can save yourself a lot of time if you know ahead of time what a lender's minimum credit requirements are. Online lenders are generally much more forgiving than banks in this regard, and are prepared to look at a number of factors other than credit score to determine your worthiness for a business line of credit. However, lenders will clearly state what their minimum requirements are, so if you don't meet these, you’ll know to look for another provider with more lenient approval standards.
3. Funding Amount Limits
Those seeking a business line of credit may not have a specific purchase they are funding with a set dollar amount, however they are still likely to have some idea of how much funding they need. Lenders generally have a minimum and maximum line of credit that they will give a business. If you are seeking more than $500,000, then a business line of credit is not the loan option for you. However, the leading online lenders will provide at least $100,000, with some of them extending far beyond this amount.
4. Funding Speed
The speed with which borrowers gain access to their funds is one of the main advantages that online lenders offer over banks. The approval process is often a matter of days and borrowers can start drawing off of their lines of credit in weeks, if not days.
5. APR and Fees
If you are a business owner, a line of credit is a product you purchase to serve your operation. Just as you would seek the product that gives you what you need for your business at the lowest possible price, you will want to choose the line of credit with the lowest APR. The business loan APR, or annual percentage rate, takes into account how much the line of credit will cost you annually, including interest rate and any fees.
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Mistakes to Avoid With a Line of Credit
While this type of business loan may sound like the perfect fix for just about any cash flow problem, it’s easy to slip into bad habits or make poor judgment calls. To make a business credit line work for you, be careful not to fall victim to these financial mistakes:
- Waiting until the last minute to apply
- Not comparing current business line of credit rates, terms, and qualification requirements between lenders
- Missing out on potential “upgrades” after improving your credit score
- Neglecting to ask if the lender reserves the right to “call” the loan
- Maxing out the credit line
It’s essential to be thorough when looking for a lender and careful when establishing a payment structure so that you don’t wind up in a tenuous financial situation.
With a business line of credit in place, you don’t have to worry about your company going under due to unexpected expenses or a particularly slow season. Be smart about how you use the money available to you, and your company can have an easier time remaining lucrative even during tough times.
Applying for a Business Loan or Line of Credit
If you’re looking to establish a line of credit or you’re wondering how to get a business loan, check out the chart above and take a look at some of the top lenders. Read through our detailed reviews, and make the right choice to ensure your business success.
Disclaimers
Upstart:
* Small business loan amounts range from $5,000 - $200,000. Your loan amount will be determined based on your credit, income, and certain other information provided in your loan application. Not all applicants will qualify for the full amount. Small business loans not available in NV, NH, MD, WV, IA.
When you check your rate, we check your credit report. This initial (soft) inquiry will not affect your credit score. If you accept your rate and proceed with your application, we do another (hard) credit inquiry that will impact your credit score. If you take out a loan, repayment information may be reported to the credit bureaus.
Biz2Credit:
* Applies to the Biz2Credit Term Loan. Not reflective of rates for all products. Full Terms & Conditions available at biz2credit.com.