A business line of credit (LOC) can be an efficient way to finance your business, especially if you want the flexibility of borrowing only what you need and only paying interest on the funds you use. It can be a great way to cover short-term cash flow needs, sudden expenses or even major purchases. But you’ll need to meet minimum credit score, annual revenue and years in business requirements to qualify.
Business lines of credit between $50,000 and $500,000
Loan provider
Loan amount
Requirements
Finder rating
American Express® Business Line of Credit
$2,000 to $250,000
1+ year in business, 660 credit score, average monthly revenue of $3,000
How much does a business line of credit between $50,000 and $500,000 cost?
Lenders that offer business lines of credit typically charge interest rates from 8% to 60%, although some may go a bit higher or lower. To get the best rates, you’ll need to be an established business with good credit and strong revenues. You may also see extra charges, such as origination fees, draw fees, annual fees or monthly maintenance charges.
To give you an idea of how much a business line of credit may cost, check out this table that assumes a two-year loan term, with 80% usage of your credit limit and a 10% interest rate. Make sure you’re aware of additional fees charged — if any — because it adds to the loan’s total cost.
Max line of credit
80% of credit line used
Term
APR
Monthly payment
Total Interest paid
Total Cost
$50,000
$40,000
2 years
10%
$1,845.80
$4,299.20
$44,299.20
$100,000
$80,000
2 years
10%
$3,691.59
$8,598.16
$88,598.16
$150,000
$120,000
2 years
10%
$5,537.39
$12,897.36
$132,897.36
$200,000
$160,000
2 years
10%
$7,383.19
$17,196.56
$177,196.50
$250,000
$200,000
2 years
10%
$9,228.99
$21,495.76
$221,495.76
$300,000
$240,000
2 years
10%
$11,074.78
$25,794.72
$265,794.72
$350,000
$280,000
2 years
10%
$12,920.58
$30,093.92
$310,093.12
$400,000
$320,000
2 years
10%
$14,766.38
$34,393.12
$354,393.12
$450,000
$360,000
2 years
10%
$16,612.17
$38,692.08
$398,692.08
$500,000
$400,000
2 years
10%
$18,457.97
$42,991.28
$442,991.28
Eligibility requirements for a business line of credit between $50,000 and $500,000
Lenders that offer business lines of credit are typically concerned with your credit score, how long you’ve been in business and how much you make.
Time in business. Most lenders want to see at least six months in business, although others may require two or more years to qualify.
Revenue. Lenders also have monthly or annual minimum revenue requirements, which can vary significantly and affect the size of your credit line. In general, you’ll usually need at least $10,000 in monthly revenue, although some lenders — like American Express — only require $3,000 a month.
Credit score. Your personal credit score is also a consideration, and you’ll most likely need a minimum score of 600 or higher. The better your score, the better rates you’ll qualify for.
Business bank account. Most lenders require that you have an open and active business checking account. They may want to verify your banking activity or use it to deposit funds.
Be a US-based business. While this is not 100% true, most US-based lenders require businesses to be based in the US.
How to get a business line of credit up to $500,000
Follow these six steps to get a business line of credit:
Determine how much you need. Deciding how much credit you’ll need will help guide you toward lenders that offer credit lines in your range.
Check eligibility requirements. Minimum requirements vary significantly, so look for lenders with criteria you can meet. Consider online lenders, traditional banks and credit unions.
Compare lenders. Once you’ve found a few lenders that meet your requirements — and vice versa — compare rates, loan terms and other loan details. Watch for additional fees, such as draw fees, annual fees or other charges.
Gather your documents. The loan process is faster if you have everything you need to submit, such as bank statements, tax returns, proof of ownership, etc. Check with the lender to find out exactly what documentation it requires. Some no-doc business lines of credit may eliminate a fair amount of required documentation by connecting to your financial accounts.
Apply. Fill out your application online or in person and submit the required documentation. Depending on the lender, you could have an answer within minutes, or it could take a few days.
Review and sign your loan agreement. If approved, carefully review your loan agreement before signing.
How long does it take to get a business line of credit?
The turnaround time for approval and funding varies by lender. Many online lenders with business lines of credit promise funding within 24 to 48 hours, and some LOCs may offer instant approval. However, there could be delays if you need to submit additional documentation.
Traditional banks and credit unions usually take a bit longer because they typically have more stringent requirements and loan processes.
How to pay off loans between $50,000 and $500,000
There are a few strategies you can use to save money on interest charges.
Pay the balance in full each month. Business lines of credit don’t typically have grace periods like credit cards, but if you can avoid carrying a balance each month, you’ll save significantly on interest.
Pay more than the minimum. You’re only required to make a minimum payment each month, but any extra you can add to that reduces the amount you pay in interest.
Make early payments. If you’ve got some extra cash on hand, but your payment isn’t due for a few weeks, pay it anyway. Whittling down that balance as often as you can is a good way to save on interest.
Alternatives to business lines of credit
If you can’t get a business line of credit or just want to explore other options, consider these alternatives:
Business credit card. Credit limits for business credit cards aren’t normally as high as lines of credit, but they are typically easier to qualify for.
Personal line of credit. Good credit borrowers who don’t have the necessary requirements for a business line of credit may qualify for a personal line of credit instead.
Business term loan. If a lump sum makes more sense for your business than a line of credit, consider a business term loan, which might offer better interest rates for good credit borrowers and longer loan terms.
Personal loan. Many business owners fund their companies with personal loans, which are generally easier to qualify for than business lines of credit.
Home equity line of credit (HELOC). Homeowners may want to consider a HELOC, which is a line of credit that borrows against your home’s equity. Or, you could get a home equity loan that also uses your home as collateral but provides the funds in a lump sum.
Personal credit cards. Rates are high for credit cards, and credit limits are lower than business lines of credit. But, if you qualify for a card with a 0% introductory rate, you could fund your business with interest-free financing for up to 21 months.
Frequently asked questions
Can I get a $100K business line of credit as a startup?
That depends. If you’ve been in business for at least six months, some lenders may approve a LOC even if you’re a startup. If you haven’t been in business that long, approval odds are slim and you may need to wait a few months or seek alternative financing.
Can I get a $250K business line with bad credit?
It can be harder to get any type of business loan if you have bad credit, but some lenders work with borrowers with bad credit. Clarify Capital, for example, accepts scores as low as 550. You may also want to consider business loans that don’t require a credit check.
Is a business line of credit better than a business term loan?
Neither type of business financing is necessarily better than the other. It depends on your plans for the loan proceeds.
For example, if you know exactly how much you need, a term loan might be your best option. But a business line of credit might make more sense if you don’t know how much you’ll need or if you’d like to draw on your loan funds from time to time and only pay interest on what you borrow.
Lacey Stark is a freelance personal finance writer for Finder, specializing
in banking, loans, investing, estate planning, and more. She has 20
years of experience writing and editing for magazines, newspapers, and
online publications. A word nerd from childhood, Lacey officially got her
start reporting on live sporting events and moved on to cover topics
such as construction, technology, and travel before finding her niche in
personal finance. Originally from New England, she received her
bachelor’s degree from the University of Denver and completed a
postgraduate journalism program at Metropolitan State University also
in Denver. She currently lives in Chicagoland with her dog Chunk and
likes to read and play golf.
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