5 Best Business Lines of Credit in 2023

Business lines of credit (LOCs) offer flexible financing for small businesses. They let you borrow what you need (up to your credit limit), repay what you borrowed, and borrow again, paying interest only on the money you use. That makes LOCs a good way to deal with cash flow problems, take advantage of time-sensitive opportunities, and otherwise handle working capital needs.

After scoring dozens of lines of credit from both traditional banks and online lenders, we found Lendio has the best business credit lines. Lendio offers the best combo of borrower requirements and interest rates ― plus, Lendio lets you shop around. But we’ve found other lenders that can work equally well for your business.

So let’s look at the top LOCs.

A business line of credit is similar to a credit card in that you can apply for access to a specific amount of money from a lender but you will only owe interest on the amount that you actually use. Based on your credit score and how much you need, the lender will determine how much money they are willing to make available to you.

While business lines of credit often get lumped in with business loans, they’re a different kind of financing altogether. A term loan gives you money in one lump sum, which you pay back over time. A line of credit, though, gives you a credit limit. So you can borrow what you want, up to that credit limit. Then you pay back what you borrowed (plus interest).

A business line of credit lets you keep borrowing and paying back repeatedly (this is called revolving credit), so you don’t have to reapply for financing every time a new need arises within the term of the credit line.

It’s kind of like a business credit card, but lines of credit usually work better for large working capital expenses. (In fact, many businesses enjoy the flexibility of using both a business line of credit and a business credit card.)

When you apply for a business loan, you’re given money for a specific purpose (like buying real estate or a new industrial mixer). But since lines of credit are a form of revolving credit that are not tied to one specific purpose, you can use them for all sorts of needs, such as:

• Purchasing equipment or inventory
• Hiring staff and making payroll
• Taking advantage of time-limited deals
• Creating marketing campaigns
• Smoothing over cash flow issues
• Tiding over seasonal profit changes

That flexibility is great for you as a business owner — but it’s also why lenders like to be careful to who they extend credit lines.

For more details on getting and using a business line of credit, check out our guide to how a business line of credit works.

Lendio is our favorite source for business lines of credit. So why does Lendio deserve the top spot? Easy — because Lendio is not a lender, but a lending marketplace.

Here’s what that means: You apply to Lendio with a brief online application. Lendio then takes your application and matches you with lenders you qualify for. You then compare offers and choose the one that works best for you. Lendio works with several of the other lenders on this list, so your application on Lendio’s lending platform gives you a shot at most of our favorite lines of credit.

Lendio’s marketplace approach lets it offer large lines of credit and competitive rates. So for most businesses looking for a line of credit, Lendio should be your first (and hopefully only) stop.

Backd might not offer the largest lines of credit — or the cheapest — but Backd gets points for flexibility and speed to funding.

That’s because Backd has the most flexible repayment requirements we’ve seen for a line of credit. Backd allows for terms of six months or 12 months. As you need funds, your credit automatically reloads when you pay your balance. There is no need to contact an agent each time you need more funds.

Applying for a line of credit is just as easy. You simply apply online with your proof of ownership, most recent tax return and bank verification. You will receive an answer and funding within 24 hours. Backd's funding turnaround is one of the fastest in the biz. 

The biggest drawback is that Backd does not fund all industries. Some industries Backd will not work with include financial services, real estate services, government or non-profit agencies, cannabis, and adult entertainment to name a few. 

Bluevine’s business line of credit can compete with the big banks while offering the convenience of an online lender.

Bluevine’s 4.8% starting interest is comparable to (or even lower than) what you can find at a traditional bank. It’s a great deal if you can qualify. Bluevine has higher application criteria than most of the other lenders on this list. Bluevine requires at least $10,000 in monthly revenue (which comes to $120,000 in annual revenue). And that’s the minimum — to qualify for the best rates, you’ll need more impressive qualifications than the minimum credit score.

Even so, if you want low rates on your business line of credit, Bluevine is the place to start. For a little bit more information on Bluevine, read our more in-depth review. 

The starting rates on OnDeck’s lines of credit may seem a little high, but discounted rates on future financing make OnDeck worth looking at.

That’s right — OnDeck gives repeat borrowers discounted rates. You can even get discounted origination fees when you repeatedly borrow from OnDeck. And when you decide to apply for a term loan in a year or two, that repeat borrowing discount might come in handy.

In other words, if your new line of credit is just the beginning of your business financing needs, then an OnDeck LOC might be your first step to discounted future rates.

If you’ve got a more established business, we suggest looking at Funding Circle

Funding Circle has stricter borrower requirements than other lenders on our list. For instance, Funding Circle requires businesses to be much older (at least two years) and to have better credit scores. But in return, you can get a very competitive APR (annual percentage rate), fast funding turnaround times, business credit bureau reporting, and more.

So if you can qualify for Funding Circle, the associated perks make it a great lender for more established businesses.

Want to avoid the weekly or even daily payments that most online lenders insist on? Take a look at Kabbage.

Kabbage offers exclusive lines of credit, but with one key advantage over other lenders: It uses a monthly repayment schedule. That kind of schedule can free up cash flow during the rest of your month. Just be careful with Kabbage’s monthly fee ― because while it can be affordable (depending on your loan term and fee rate), it can also get quite costly.

But with the right term and rate, Kabbage’s monthly schedule can be just what you need to get more working capital without sacrificing cash flow.

If a business line of credit is not right for you, there are funding alternatives through personal lines of credit or traditional banks. 

A personal line of credit can seem appealing because it has no time in business requirements or revenue requirements. If you have a very young business (or you’re about to start one), you’ll have an easier time getting a personal line of credit than a business line of credit. Sounds good, right?

As you can probably guess, though, personal lines of credit have some cons you need to consider. For example, they often have higher credit requirements than many of the business lenders on our rankings.

Plus, some personal lenders have restrictions on how you can use your borrowed funds, meaning you may not be able to use your personal line of credit on a business. And depending on the type of credit line you get, your personal LOC could come with a high-interest rate and expensive fees.

Traditional banks offer some of the lowest rates and highest credit limits. Many offer a choice of both unsecured and secured business lines of credit too. (Securing your financing with collateral can further lower your interest rate.)

The biggest downside is that big banks have much higher application criteria than most online lenders. For example, almost all banks require your business to be at least two years old and only accept credit scores over 700. 

If your business can meet those kinds of qualifications, by all means, get your business line of credit from a traditional bank. You’ll probably get a stellar deal, especially if you do your business banking at the same financial institution. But for many small businesses, alternative lenders are the way to go — even if they cost a little more.

Many lenders offer lines of credit, but we believe Lendio has the best business line of credit for most small business owners. That’s because its competitive lending marketplace approach lets you compare line of credit offers to find the best deal.

Of course, we found plenty of other solid lenders too. If you’re looking for the lowest rates, start with Bluevine. Or, if set-in-stone repayment plans make you panic, Backd is your best bet. For businesses that plan to do more borrowing in the future, OnDeck offers some great perks. And if you prefer a monthly payment schedule, we recommend Kabbage.

So whatever your financing needs, we’re confident you can find the right line of credit for you.

Lines of credit are just one type of small-business lending available to you. Explore your other capital options with our rankings of the best small-business loans.

We researched dozens of business lenders and then used our standardized scoring system to grade their lines of credit on factors including credit limits, interest rates (or fees), customer reviews, and more. With the resulting scores, we created our rankings and lender reviews.

Disclaimer

At Business.org, our research is meant to offer general product and service recommendations. We don't guarantee that our suggestions will work best for each individual or business, so consider your unique needs when choosing products and services.