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A business line of credit can be a great way to finance your startup business, offering flexibility and a renewable funding source. But newer businesses may have a more difficult time meeting the criteria needed to qualify. Consider these lenders that offer business lines of credit to help you start or grow your new business.
Finder’s business loan experts analyzed dozens of lenders offering business lines of credit for startups and newer businesses. We ultimately chose lenders that offer more lenient requirements than traditional business loans and are willing to work with newer businesses and owners with, potentially, lower credit scores and less revenue.
Some of the criteria we evaluate include:
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Consider these factors when choosing the best business line of credit for your company:
A business line of credit is a revolving line of credit similar to a credit card. It gives you access to a set amount of funds, but you only have to pay interest on the money you use. Business lines of credit can be found at banks, credit unions or online lenders. These loans may be secured or unsecured LOCs, and some don’t require a personal guarantee.
When you get a business line of credit, you’ll typically be approved for a preset line of credit limit up to $500K or more. As you require funding, you can draw on those funds as often as needed, up to your approved limit. And, unlike other business loans, you only have to pay interest on the funds you spend And as you make payments, your funds are replenished.
Most business lines of credit lenders have flexible repayment terms. Typically, you only have to make interest payments during the draw period, although you also have the option to pay more, saving yourself on interest charges in the long run. Lines of credit generally have short loan terms of two years or less.
Consider the risks and rewards of a business line of credit before deciding if it’s the right type of financing for your business.
Consider other lenders that offer loans for startup businesses.
We currently don't have that product, but here are others to consider:
How we picked theseThe Finder Score crunches 12+ types of business loans across 35+ lenders. It takes into account the product's interest rate, fees and features, as well as the type of loan eg investor, variable, fixed rate - this gives you a simple score out of 10.
To provide a Score, we compare like-for-like loans. So if you're comparing the best business loans for startups loans, you can see how each business loan stacks up against other business loans with the same borrower type, rate type and repayment type.
If you want to look into other funding options, consider these alternative types of business financing.
| Type | Typical loan amounts | Typical term lengths | Best for |
|---|---|---|---|
| SBA Loans | $13,000 to $5 million | Up to 25 years | Established businesses with decent credit that don’t qualify for other types of funding |
| Equipment financing | Up to 100% of the cost of the equipment | 3 to 10 years | Businesses that need heavy equipment or other expensive machinery |
| Term loans | Up to $2 million | 1 to 10 years | Businesses with good credit looking for large loan amounts and predictable monthly payments |
| Microloans | $500 to $50,000 | Up to 6 years | Startup businesses or women- or minority-owned firms |
| Invoice factoring | 70% to 90% of unpaid invoices | 1 to 3 months | Business-to-business (B2B) companies with a lot of outstanding invoices |
| Invoice financing | 70% to 80% of unpaid invoices | 1 to 3 months | B2B companies with a lot of outstanding invoices |
| Merchant cash advance | $5,000 to $200,000 | 3 to 12 months | Retail businesses or others that have a lot of credit card sales |
Most lenders that offer startup business lines of credit are usually focused on your credit score, how long you’ve been in business and how much revenue you take in.
Some lenders offering no doc lines of credit may require less paperwork or be able to access your financial information by connecting to your bank account.
The exact process to get a startup business line of credit may vary depending on the lender, but the basic steps are similar:
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What is your primary need for a business loan?
If you don’t qualify for a business line of credit or just want to explore your options, consider these alternatives:
It can be more difficult to qualify for a line of credit when you’re a newer business. But, some lenders, like the ones on our list, may be more willing to work with those that haven’t been operating for very long and may have more lenient revenue and time-in-business requirements.
Credit score requirements can vary widely, although most lenders require a credit score of at least 600 to qualify. But some lenders accept lower scores.
If your business hasn’t opened yet, you may need to consider alternative lending sources, such as lenders that offer portfolio loans, which use your investment funds as collateral for a line of credit. Or, you could check with your bank about opening up a personal line of credit to fund your new business.
Fundible offers flexible, fast small business funding with tailored options for a range of credit profiles.
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