Business Line of Credit
Revolving credit you draw on demand, repay, and draw again. Only pay interest on what you actually use — the most flexible capital tool for managing cash flow.
A Financial Safety Net
That Always Reloads
A business line of credit grants you an approved credit limit you can draw from at any time. You only pay interest on what you borrow. As you repay, your available credit replenishes automatically — giving you a permanent, on-demand capital facility for any opportunity or unexpected need.
Who Qualifies?
- 1+ year in business
- $10,000+ in average monthly deposits
- 560+ personal credit score
- Active business checking account
- No open federal tax liens
A line of credit works best when you need capital on standby — not a one-time lump sum. Contractors bridging invoice gaps, retailers buying inventory, or service businesses managing seasonal payroll are ideal candidates.
LOC rates by credit tier (May 2026)
Line of credit pricing tracks WSJ Prime (currently 6.75%) plus a credit-dependent spread. Unlike term loans, LOC rates are almost always variable — the spread stays fixed but the underlying index moves. Below is the current market range.
| Tier | FICO | Typical Limit | APR (Variable) | Draw Fee |
|---|---|---|---|---|
| Bank Prime | 740+ | $50K–$500K | 9–13% | 0% |
| Strong Online | 680–739 | $25K–$250K | 12–19% | 0–2% |
| Mid-Tier | 650–679 | $10K–$100K | 17–25% | 1–3% |
| Sub-Prime | 600–649 | $5K–$50K | 22–36% | 2–5% |
| Specialty | 560–599 | $2K–$25K | 28–48% | 3–6% |
Rates vary based on credit profile, lender, and market conditions. Variable rates typically track WSJ Prime + spread. Some lenders charge a one-time origination fee (1–3%), monthly maintenance fee ($25–$95), or both.
Revolving vs. non-revolving, secured vs. unsecured
"Line of credit" is a category, not a single product. The four variants below price differently, qualify differently, and fit different use cases.
Most common. Draw, repay, draw again — like a credit card. No collateral, but personal guarantee required. APR 12–25%. Limits typically $10K–$250K.
Best for: cyclical working capital, payroll bridges, opportunistic inventory buys.
Backed by AR, inventory, or real estate. APR 8–14%. Limits $100K–$5M+. Higher limits, lower rates, but underwriting takes 2–6 weeks and requires regular borrowing-base reporting.
Best for: established businesses with strong receivables, manufacturers, distributors.
Single draw at funding, then amortizes like a term loan. Used as a "draw-when-ready" structure for project-based work. Fewer lenders offer this; rates closer to term loan tier.
Best for: construction draws, multi-stage projects with known milestones.
Limit recalculated monthly based on AR aging and inventory levels (typically 70–85% advance rate on eligible AR, 40–60% on inventory). Lowest rates (Prime + 1–4%) but heaviest reporting burden.
Best for: $1M+ revenue businesses with concentrated AR — light manufacturing, wholesale distribution.
$100K LOC: cost only when you use it
The fundamental LOC advantage: interest only accrues on drawn balance, not the full limit. Here's the math on a typical revolving LOC over 12 months — same scenario, different usage patterns.
| Scenario | Avg Drawn | Annual Interest | Effective APR |
|---|---|---|---|
| Never drawn | $0 | $0 + $300 maint. | N/A (insurance) |
| Drawn $20K avg | $20,000 | $3,300 + $300 | ~18% drawn / 3.6% commitment |
| Drawn $50K avg | $50,000 | $8,250 + $300 | ~17% drawn / 8.5% commitment |
| Maxed all year | $100,000 | $16,500 + $300 | ~16.8% drawn / 16.8% commitment |
Assumes 16.5% APR + $25/mo maintenance fee on a $100K limit. The takeaway: if your need is intermittent, an LOC is dramatically cheaper than a term loan. If you'll keep it maxed all year, a term loan at 13–14% APR would actually cost less. The break-even is typically 65–75% utilization — below that, LOC wins; above that, term loan wins.
Line of credit questions, answered
Compare to Other Funding Options
See side-by-side comparisons to help pick the right product for your situation.
Ready to Get Your Best Offer?
No cost to apply. No obligation to accept. We review your application against 75+ lenders.