A startup business line of credit is a flexible financing product that lets you withdraw funds up to a predetermined amount — and only pay interest on the money you withdraw. Once you repay the funds you’ve borrowed, you can continue to draw on the line.
A business line of credit can be used to help your startup manage cash flow gaps, as well as pay for short-term working capital needs such as inventory purchases, future project costs or company payroll — especially when you’re just launching your operations.
Although it can be difficult for startups to access traditional small-business loans, some online lenders offer lines of credit to borrowers with one year or less in business.
Below, compare our picks for the best startup business lines of credit and learn how to qualify for financing.
How much do you need?
We’ll start with a brief questionnaire to better understand the unique needs of your business.
Once we uncover your personalized matches, our team will consult you on the process moving forward.
Here are 4 options for you
Lender | Best for | Max loan amount | Min. credit score | Next steps |
|---|---|---|---|---|
Kabbage - Line of credit on Kabbage's website | Best for Startup business lines of credit with monthly payments | $250,000 | 640 | on Kabbage's website |
Fundbox - Line of credit with Fundera by NerdWallet | Best for Unsecured business lines of credit for startups | $150,000 | 600 | with Fundera by NerdWallet |
Bluevine - Line of credit with Fundera by NerdWallet | Best for Startup business lines of credit for bad credit | $250,000 | 600 | with Fundera by NerdWallet |
OnDeck - Line of credit with Fundera by NerdWallet | Best for Startup business lines of credit for building business credit | $100,000 | 600 | with Fundera by NerdWallet |
Our pick for
Startup business lines of credit with monthly payments
Kabbage offers credit lines up to $250,000 for startups with one year or more in business. Kabbage lines of credit are repaid on a monthly basis.
Kabbage - Line of credit
Max Loan Amount
$250,000
Min. Credit Score
640
Est. APR
9.00-36.00%
Kabbage loans are a good option for business owners with fair credit who want quick access to working capital.
Our pick for
Unsecured business lines of credit for startups
Fundbox offers business lines of credit for startups with six months or more in business, and it doesn’t require physical collateral. Borrowers are subject to UCC blanket liens, however, and may be required to sign a personal guarantee.
Fundbox - Line of credit
Max Loan Amount
$150,000
Min. Credit Score
600
Est. APR
10.10-79.80%
Fundbox offers a business line of credit to fill a cash-flow gap, and qualifying is easier than with other lenders.
May fund quickly
Our pick for
Startup business lines of credit for bad credit
Bluevine offers credit lines for startups with six months or more in business; it accepts borrowers with credit scores of 600 or higher.
Bluevine - Line of credit
Max Loan Amount
$250,000
Min. Credit Score
600
Est. APR
15.00-78.00%
Bluevine's line of credit provides fast working capital for short-term borrowing needs.
May fund quickly
Our pick for
Startup business lines of credit for building business credit
OnDeck offers fast lines of credit for startups with one year or more in business. By making timely payments, you can use an OnDeck line of credit to build your business credit history.
OnDeck - Line of credit
Max Loan Amount
$100,000
Min. Credit Score
600
Est. APR
11.00-61.90%
OnDeck offers a fast line of credit for small-business owners with less-than-stellar credit who need to manage cash flow or buy inventory.
May fund quickly
How Much Do You Need?
Although banks and credit unions typically offer business lines of credit with the most competitive rates and terms, startups usually don’t qualify. Traditional lenders generally require that borrowers have two or more years in business for both secured and unsecured business lines of credit.
Online lenders are more flexible. Certain online lenders, like Fundbox and Bluevine, offer startup business lines of credit to borrowers with six or more months in business — while others, like Kabbage and OnDeck, will only work with those with 12 or more months in operation.
Many online lenders have streamlined application processes and can provide financing within 24 hours. Compared to bank lenders, online lenders are less likely to require physical collateral to back a line of credit, but they may still secure the line with a personal guarantee or Uniform Commercial Code lien.
Some online lenders will work with startups with bad credit (FICO score of 629 or below).
Pros
- Flexible form of financing. A business line of credit is one of the most flexible forms of business funding. You can use a line of credit for a range of short-term purposes, including managing cash flow, covering emergencies or taking advantage of unexpected opportunities. Flexibility makes this financing solution well-suited for the unpredictability of running a startup business.
- Access to fast cash. You can draw funds from your credit line and have access to cash quickly — when you actually need it — and only pay interest on the funds you draw. Plus, when you repay what you’ve borrowed, you can continue to draw on the line.
- Build business credit. Spending responsibly with a business line of credit allows you to build a positive business credit history, which can help you obtain future credit accounts and loans. Making your payments on time and keeping your credit utilization ratio at or below 30% can help your business credit — as long as your lender reports responsible spending to the business credit bureaus.
Cons
- Can be expensive. Annual percentage rates on some startup business lines of credit can run high, as newer businesses generally pose a greater risk to lenders compared to more established businesses. To qualify for the best possible rates, it can help to show solid business financials and strong credit history — and in some cases, secure your line with collateral.
- Limited options. Not all lenders offer startup business lines of credit, and there can be limitations for the ones that do. Compared to credit lines available to more established businesses, for example, business lines of credit for startups may have smaller borrowing limits and shorter repayment terms.
- Personal financial risk. Even if you can qualify for a startup business line of credit, it’s important to make sure you can afford to take on potential debt. Finances can be tight when running a startup and you need to be able to repay borrowed funds if your business slows — or even fails. If you can’t repay your line of credit, it will likely impact your personal credit and finances. Most lenders will require you to sign a personal guarantee so that you’re individually responsible for paying back your debt, even if your business fails.
Generally, you can apply for a startup business line of credit from an online lender — although you may be able to find a local or community bank that is willing to lend to newer businesses.
Interest rates, borrowing limits and qualifications can vary by lender. Typically, to qualify for a startup business line of credit, it’s helpful to have:
- Credit score: 600 or higher.
- Annual revenue: $100,000 or more (Or at least $8,333 per month).
- Time in business: Six months or more.
As part of your business loan application, lenders will consider your credit score, annual revenue and time in business — as well as ask you to provide personal and business documentation.
You may need to include any of the following:
- Business registration documents.
- A business plan.
- Personal and business bank statements.
- Personal and business tax returns.
- Business financial statements, such as a profit and loss statement and balance sheet.
Some online lenders allow you to complete your line of credit application by connecting your financial accounts — like a business checking account or accounting software — to their platform in order to expedite the underwriting process.
Whether you connect your financial accounts or upload financial documents, the more information you can provide that shows your business’s ability to repay the debt, the more likely you are to qualify for a startup business line of credit with the best possible rates and terms.
For a look beyond business lines of credit, check out NerdWallet’s list of best small-business loans for business owners. Our recommendations are based on the market scope and track record of lenders, the needs of business owners and an analysis of rates and other factors, so you can make the right financing decision.
Last updated on February 7, 2022
To recap our selections...
Startup Business Line of Credit: Best Options and How to Qualify
- Kabbage - Line of credit: Best for Startup business lines of credit with monthly payments
- Fundbox - Line of credit: Best for Unsecured business lines of credit for startups
- Bluevine - Line of credit: Best for Startup business lines of credit for bad credit
- OnDeck - Line of credit: Best for Startup business lines of credit for building business credit