How to get a business line of credit to fund ongoing expenses

Get a business line of credit to fund ongoing expenses

Use a business line of credit to get quick access to cash for your business and gain financial control by paying back the funds at your own pace.

When you find that your operating expenses are increasing faster than your revenue, you may need quick access to cash. In this case, you might consider a business line of credit, which offers several advantages over other forms of financing. With a business line of credit, you’re able to pay down business expenses by having access to a revolving line of credit that you can use for ongoing expenses or when business emergencies arise.

Most business line of credit lenders require you to have been in business for at least a year and meet certain revenue criteria. If you have a newly established business, check out our guide on startup loans.

OnDeck Small Business Loans

OnDeck Small Business Loans

Among the largest online business lenders offering term loans and lines of credit at competitive fixed rates.

  • Minimum Amount: $5,000
  • Maximum Amount: $500,000
  • Loan Term: 3 to 36 months
  • Simple online application process with fast decisions
  • Dedicated loan specialists and loyalty benefits
  • Must have been in business for at least one year with annual revenue of $100,000+
  • Must have a personal credit score of 500+

    How does a line of credit for business work?

    After approval, you’re given a specified credit limit. You’re then able to access these funds up to that limit. You’ll only be responsible for paying back what you actually borrowed, plus any other fees charged by the lender. Moreover, your lender will only charge you interest on the amount borrowed, not the entire amount you’re approved for. Depending on the lender, you may also be required to put up collateral as security for your line of credit.

    In the end, a business line of credit gives you control since you’re able to borrow only what you need and pay it back at your own pace. This added flexibility is what makes a business line of credit valuable and practical for business owners.
    Compare business lines of credit vs. term loans

    Compare business loan lenders who may offer lines of credit

    Rates last updated February 22nd, 2018
    Name Product Product Description Min Loan Amount Maximum Loan Amount Requirements
    LendingTree Business Loans
    Compare multiple business financing options in one place including: small business loans, lines of credit, SBA loans, equipment financing and more.
    Varies by lender and type of financing
    Varies by lender and type of financing
    Varies by lender, but you many require good personal credit, a minimum business age and minimum annual revenue.
    OnDeck Small Business Loans
    A leading online business lender offering flexible financing at competitive fixed rates.
    $5,000
    $500,000
    Must have been in business for at least one year with annual revenue of $100K+. Must have a personal credit score of 500+.
    LendingClub Business Loans
    With loan terms that vary from 1 to 5 years, enjoy fixed monthly payments and no prepayment penalties through this award-winning lender.
    $5,000
    $300,000
    2+ years in business; $75,000+ in yearly sales; No bankruptcies or tax liens; At least 20% ownership of your business; Fair or better personal credit
    LoanBuilder, A PayPal Service Business Loans
    $5,000
    $500,000
    Annual business revenue of at least $100,000, at least 1 year in business, personal credit score of 600+.
    National Business Capital Business Loans
    Get a large business loan to cover your financing needs, no matter what the purpose is.
    $10,000
    $5,000,000
    Your company must have been in business for at least 6 months and have an annual revenue of at least $180,000.
    Kabbage Small Business Line of Credit
    A simple, convenient online application could securely get the funds you need to grow your business.
    $2,000
    $250,000
    Must have been in business for at least 1 year. Revenue minimum is $50,000 annually or $4,200 per month over the last 3 months.
    SmartBiz SBA Loans
    Get funding for your small business with a government-backed loan and extended repayment terms.
    $30,000
    $5,000,000
    Personal credit score of 650+; US citizen or permanent resident; Business must be 2+ years old; Annual revenue of $50,000+; No outstanding tax liens; No bankruptcies or foreclosures in past 3 years.
    Excel Capital Management Small Business Loans
    Get personalized financing options that suit your unique business needs in just a few simple steps.
    Varies by loan type
    Varies by loan type
    Your business must operate in the US, be at least 1 year old and have monthly revenue of $15,000+.

    Compare up to 4 providers

    Features to consider when exploring business lines of credit

    • Interest rates. Make sure you understand whether your lender charges a variable or fixed interest rate. Also, keep in mind you’ll only be charged interest on the amount you actually borrow, not on the amount you’re initially approved for.
    • Fees. Usually, a business line of credit includes one-off fees such as application and establishment fees. They also may include other fees such as annual charges, ATM and transaction fees.
    • Monthly repayments. Business lines of credit can be paid in partial monthly repayments. If you can afford to pay off your balance in full, you’ll avoid unnecessary interest charges.
    • Secured vs. unsecured. Some business lines of credit may need to be secured, meaning you may be required to put up an asset as collateral.

    How to compare your options for business lines of credit

    Here are some questions you can ask to compare your options:

    • Can my business afford it? This should always be the main factor in your decision. Before taking out any type of debt, be sure to calculate all associated costs and make sure your business’s cash flow is able to take on new monthly repayments.
    • How much can I borrow? Different lenders offer varying minimum and maximum amounts. However, the particular amount you’re approved for depends on several factors that may include past credit history, requested credit limit, cash flow, assets and liabilities.
    • When will I receive my line of credit? Make sure the lender you choose can provide your funds when you need them. Otherwise, you’ll be wasting lots of time, resources and money.
    • How much will it cost me? Besides the interest rate, check to see what fees you’ll be charged, including one-off fees such as application, line and establishment fees. The lender may also include ongoing fees such as loan service and annual fees.
    • How much will my repayments be? Your monthly repayments aren’t fixed and will depend on how much you would like to pay down. As long as you pay interest and other fees for the month, lenders provide great flexibility on how much of the balance you want to pay back.

    Things to avoid with a business line of credit

    • Borrowing more than you can afford. Especially with business lines of credit, you may easily borrow more than your business requires or can afford. Also, just because you’re approved for a certain limit, doesn’t mean you should use it all. Lastly, think twice before requesting a credit limit more than what you actually need. By doing this, you can find yourself quickly getting into too much debt and, with it, put your business in financial distress.
    • Taking too long to repay. With business lines of credit, you’re not required to pay back the amount you borrowed within a fixed period. Rather, you have the option to pay only minimum monthly charges. Whatever balance is left unpaid, interest and charges accrue. This means the longer you wait to pay back your unpaid balance, the more expensive it gets. Avoid this by paying down your unpaid balance as much as financially possible.

    Frequently asked questions about business lines of credit

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