A business line of credit is a great form of flexible, renewable financing. And it’s even better if you can get it as soon as you need it. Consider these lenders that offer instant approval — or at least fast — and funding within a day.
Finder’s business loan experts analyzed dozens of lenders offering business lines of credit with fast approval and funding. We ultimately chose lenders that have streamlined application and approval processes to get funding to your business as quickly as possible. We also took into account other factors, such as rates and loan terms, fees and requirements needed to qualify.
The criteria we evaluate includes:
Additional fees
Credit line loan amounts
Credit score requirements
Interest rates
Loan terms
Repayment plans
Reputation of the lender
Revenue requirements
Time in business requirements
Turnaround times
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How to compare business lines of credit
Consider these factors when choosing the right instant approval business line of credit for your company:
Turnaround times. Funding can be relatively quick for business lines of credit, but the funding process may take longer for some lenders. Being prepared with all the required documentation — or looking into no-doc LOC lenders — can help to speed up the process.
Rates. Interest rates vary widely between lenders. Comparing multiple lenders helps you find the best line of credit rates.
Fees. Lenders that offer business lines of credit typically charge a variety of fees, including origination, maintenance and draw fees, among others. Look for lenders that charge minimal fees to help you save money.
Lender requirements. Most lenders have minimum revenue and time in business requirements. Before you apply, make sure you meet the criteria of lenders you’re interested in.
Loan terms. Business lines of credit often have relatively short loan terms — and some require weekly payments — so be sure your budget can manage the repayment schedule.
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What is a business line of credit and how does it work?
A business line of credit is a revolving line of credit that works kind of like a credit card, although it gives you more affordable access to cash. But like a credit card, you only pay interest on the money you spend. The loans can be either secured or unsecured LOCs, and some may not require a personal guarantee.
If approved for a business line of credit, you’ll be offered a preset credit line up to $500,000 or more. Then, you can draw on those funds as often as you need to, as long as you don’t exceed the limit. As you pay down the balance, your funds are replenished.
In general, business lines of credit lenders have flexible repayment terms. Typically, you’re only required to make interest payments during the draw period, but you can always pay more if you like, which saves you on interest charges. Lines of credit generally have short loan terms of two years or less, although some may extend longer than that.
Pros and cons of business lines of credit
Consider the benefits and drawbacks of a business line of credit before deciding if it’s the right kind of funding for your business.
Pros
Only borrow as much as you need
Renewable funding source
May be easier to qualify for than other business loans
Can help build business credit
Cons
Often come with multiple fees
Interest rates can be higher than some loan options
Loan terms are usually relatively short
May require weekly repayments
How to qualify for a business line of credit
Most lenders that offer business lines of credit look at your credit score, how long you’ve been in business and how much revenue you make.
Revenue. Revenue requirements can vary significantly by lender and affect how much you can borrow, your rate and loan term. Lenders typically require a minimum of $10,000 in monthly revenue, but some may consider businesses with lower revenue.
Time in business. Most lenders require that you’ve been in business for at least six months, although some require a year or two.
Credit score. You’ll most likely need a credit score of at least 600 to qualify, although a few lenders may consider borrowers with lower scores. However, a score of 700 or higher may get the best rates and terms.
Business checking account. You likely need an active business checking account. Lenders may require it to verify your banking activity, use it to deposit funds or to automatically deduct your payments.
How to apply for a business line of credit
Applying for a business line of credit can vary by lender, but here are the basic steps:
Determine how much you need. Define your goals for the funding and how much you think you’ll need.
Look at your budget. Calculate how much you can afford for your loan payments, keeping in mind that some lenders may require weekly or bi-weekly payments.
Check your credit score. Knowing your credit score before applying will help guide you toward lenders that accept borrowers in your credit range. While you’re at it, make sure your credit report is accurate, too.
Compare lenders. Compare interest rates, fees and loan terms from multiple lenders to find the best deal.
Research requirements. Research lender requirements before you apply to make sure you qualify. For example, if you’ve only been in business for six months, you’ll need to find lenders that consider newer businesses.
Gather your documents. To speed up the loan process, make sure you have all the necessary documentation on hand.
Apply. Once you’ve chosen a lender, follow the instructions to apply for a line of credit, submitting any required documents.
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Alternatives to business lines of credit
If you don’t qualify for a business line of credit or want to explore other options, consider these alternatives:
Business credit card. Credit limits for business credit cards are usually lower than lines of credit, but they could be easier to qualify for.
Personal line of credit. If you don’t meet the requirements for a business line of credit, you may still qualify for a personal line of credit.
Personal loan. You may want to consider a personal loan to fund your business, which is generally easier to qualify for than a business line of credit.
Home equity line of credit (HELOC). If you own your home, you may want to look into a HELOC, 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. You could use your own credit card to finance your business, but beware of high rates if you can’t pay it off quickly. Or you could apply for a new card with a 0% introductory rate and take advantage of interest-free financing for up to 18 months or more.
Frequently asked questions
Can a new LLC get a business line of credit?
Most lenders that offer business lines of credit are willing to work with LLCs. But if you’re new, you’ll need to search for lenders with lower minimum time in business requirements. Most, however, want to see at least six months in business.
What is the minimum credit score for a business line of credit?
For the most part, lenders require a credit score of at least 600, although some require 670 or higher to qualify. However, if you look around, a few lenders accept lower scores, but you should expect higher rates.
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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