How is a business line of credit different from a credit card?
Both are revolving facilities, but lines of credit usually offer higher limits, lower APRs, and direct cash transfers to your business bank account (vs. card-based purchases). Cards are better for everyday expenses; lines are better for working capital and larger, ad-hoc draws.
What credit score do I need for a business line of credit?
Most non-bank lines start at 600+ owner FICO with 12+ months in business and $15k+ monthly deposits. Bank lines typically require 680+ FICO, two years in business, and stronger financial reporting (P&L, balance sheet, often tax returns).
How fast can a line of credit fund?
Non-bank / fintech lines often issue an approval in 24–48 hours and fund first draws in 1–7 business days. Bank lines typically take 2–6 weeks from application to approval and another few business days to fund a draw.
Do I pay interest on the full line or just what I draw?
Just what you draw. If you have a $100,000 line and draw $20,000, you accrue interest only on the $20,000 outstanding. Some lines also charge a small annual maintenance fee on the undrawn portion — confirm this before signing.
Can a lender close my line of credit?
Yes — most line agreements allow the lender to reduce or close the line under specified conditions (covenant breach, deteriorating financials, or in some agreements, at the lender's discretion). Read the renewal and termination clauses carefully.
Is a business line of credit better than an MCA?
For most established businesses with predictable revenue and 600+ credit, yes — a line is meaningfully cheaper and more flexible. An MCA wins on speed and on qualification flexibility (lower credit, shorter time in business, weaker financials).
What is the minimum revenue for a business line of credit?
Most non-bank lines require $15,000+ in monthly business deposits (trailing 3–6 months consistent). Bank lines typically require $25,000+ monthly deposits and a debt-service coverage ratio above 1.15x. SBA-backed CAPLines have no fixed minimum but use trailing cash-flow analysis to size the line.
Can a startup get a business line of credit?
Under 12 months in business is generally a hard no for traditional lines. Three paths exist for early-stage businesses: (1) a personal line of credit secured by the owner, (2) a secured business credit card that reports to business bureaus and helps build credit history toward a line in 12+ months, (3) revenue-based financing if there's documented monthly revenue. None are a substitute for a true line — they're bridge products.
How does a business line of credit affect personal credit?
Most non-bank lines run a hard personal credit pull at application — typical 5–10 point dip, recovering in 90 days. Most lines do NOT report ongoing balances to personal credit bureaus (only to business bureaus like D&B and Experian Business), so utilization doesn't affect your personal score. A default or charge-off would, though, since most lines require a personal guarantee.
What is the difference between a secured and unsecured business line of credit?
Unsecured lines (most non-bank fintech lines) rely on cash flow + personal guarantee — no specific collateral pledged. Secured lines (most bank lines above $250K) are typically blanket-lien (UCC-1 filed on all business assets) or AR-secured (line capacity tied to outstanding receivables). Secured lines price 200–400 basis points cheaper but tie up your collateral capacity for any future financing.
