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Business lines of credit offer flexibility and accessibility that traditional loans do not, making them an invaluable resource for growing businesses. Operating much like a credit card but with a significantly higher limit, this type of financing allows businesses to draw upon a pre-approved amount of money to meet daily or cyclical business needs. Interest is not charged on the unused portion of the funds, which can lead to significant cost savings, especially for businesses that face irregular cash flow patterns.
The key to successfully navigating larger lines of credit lies in understanding their structure and strategically using the funding they offer. Businesses must consider their ability to meet the repayment terms and how best to utilize their cash flow and credit line to streamline their operations. The flexibility to draw and repay at will helps businesses control interest costs while maintaining ready access to funds, but it can also lead to overuse and overextension without a solid plan in place.
Learn everything you need to know about large business lines of credit in our comprehensive guide. When you’re ready to explore your options, complete our easy application to get started with our award-winning team.
Understanding Lines of Credit
A line of credit (LOC) is a flexible loan from a bank or financial institution that functions as a pre-approved amount of money a business can access as needed. Unlike a traditional loan that offers a lump sum amount upfront and starts accruing interest immediately, a line of credit offers businesses the ability to draw funds up to a certain limit at any time, pay interest only on the amount used, and replenish it once repaid.
- Access to Funds: Businesses can draw on their line of credit account at any time, provided they do not exceed the maximum set in the agreement with the bank. Money can be withdrawn as needed until the credit limit is reached, and like a credit card, the line of credit is reusable as it is paid off.
- Repayment Terms: Repayment terms for lines of credit are very flexible. Businesses can repay the entire outstanding balance at once or make minimum monthly payments, similar to a credit card. Interest is charged on the amount borrowed, typically calculated daily.
- Interest Rates: Unlike loans, which typically have fixed interest rates, lines of credit usually have variable rates that can change over the life of the line of credit.
- Secured vs. Unsecured: Lines of credit can be secured (backed by collateral) or unsecured, with secured lines typically offering larger amounts and lower interest rates.
Top Options for a Large Business Line of Credit
It's essential to compare the top options available to find the one that best fits your company’s financial needs and goals. Here, we’ll discuss some of the leading options, including offerings from major banks, non-bank financial institutions, and SBA-backed lines of credit.
Major Bank Offerings
1. Bank of America Business Advantage Credit Line
- Credit Limit: Up to $250,000
- Interest Rates: Variable rates starting around Prime + 1.75%
- Features: Includes a business credit card with rewards, overdraft protection, and online and mobile banking
- Pros: Large credit limits, competitive rates, and additional banking services
- Cons: Stringent credit requirements and extensive documentation needed for approval
2. Wells Fargo BusinessLine®
- Credit Limit: Up to $100,000 unsecured; up to $500,000 secured
- Interest Rates: Variable rates starting at Prime + 1.00%
- Features: No collateral needed for lines up to $100,000, access to funds through checks, online transfers, and credit cards
- Pros: No collateral for smaller lines, flexible access to funds, and robust customer service
- Cons: Higher interest rates for unsecured lines and potentially high annual fees
3. Chase Business Line of Credit
- Credit Limit: $10,000 to $500,000
- Interest Rates: Variable rates based on the Prime Rate plus a margin
- Features: Access to funds via checks or card, integration with other Chase business products, and personalized service from business banking specialists
- Pros: High credit limits, seamless integration with other Chase services, and flexible repayment options
- Cons: Higher credit standards and detailed financial documentation required
Non-Bank Financial Institutions
1. National Business Capital
- Credit Limit: $1MM+
- Interest Rates: Depend on the financial profile of the borrower and/or offered collateral
- Features: Limited documentation needed, funds available within minutes, ability to achieve more competitive rates and terms through your Business Finance Advisor
- Pros: Large credit limits, easy access to funding, flexible terms
- Cons: Limited to businesses with higher annual revenues
2. Kabbage Line of Credit
- Credit Limit: Up to $250,000
- Interest Rates: Monthly fees ranging from 10% to 20% of the loan amount
- Features: Quick application process, funds available within minutes, and flexible credit access via mobile app or online.
- Pros: Fast approval, easy access to funds, and flexible terms.
- Cons: Higher interest rates and fees, limited credit amounts
3. OnDeck Line of Credit
- Credit Limit: Up to $100,000
- Interest Rates: Starting at 13.99% APR
- Features: Quick application process, funds available within 24 hours, and no penalty for early repayment.
- Pros: Fast funding, transparent fee structure, and dedicated account manager.
- Cons: Higher interest rates, especially for lower credit scores, more robotic transaction/support
SBA-Backed Lines of Credit
1. SBA CAPLines Program
- Credit Limit: Up to $5 million
- Interest Rates: Based on the Prime Rate plus a negotiated margin
- Features: Multiple types of CAPLines are available, including Seasonal, Contract, Builders, and Working Capital lines of credit
- Pros: High credit limits, favorable terms, and support for specific business needs
- Cons: Lengthy application process, significant documentation required, and strict eligibility criteria
6 Steps to Getting a Large Business Line of Credit
1. Assess your business needs
The first step in getting a large business line of credit is to assess your business needs. In other words, what is your goal with this loan, and how much do you need exactly?
If you are not sure how to make this assessment, here are a few key questions that you will need to ask yourself about your business before reaching out to a lender:
- Why do I need a large business line of credit? - for example, are you planning to use it to expand to new markets? Maybe you need the funding for operational expenses?
- How much do I need to borrow? - estimating the right amount you need to borrow is crucial. While it’s good to have a higher threshold for borrowing funds, overestimating can lead to higher unnecessary costs and less favorable terms. On another hand, underestimating the amount can lead to a shortfall of funds.
- What is my borrowing capacity? - while the lender will estimate your borrowing capacity when reviewing your application, it is important to assess your business’ current financial health beforehand. This will give you an idea on what to expect.
- Can my business afford the repayments? - once you know the amount of funds that you are looking to borrow with a large business line of credit, make a rough estimation of the monthly repayments and whether you can actually afford them.
- When do I need the funds? - it is important to determine when you will need access to the funds, and if the timeline aligns with the lender's process for approval and disbursement.
While you may be tempted to start your large business line of credit application right away, don’t skip this exercise about assessing your financial situation.
Doing this will not only help you understand your needs and whether you can actually meet them with this loan, but it will also prepare you for the actual application. Remember, lenders will need clear answers to these questions as well!
2. Review your credit score
When applying for a large business line of credit, another key step you’ll have to take is reviewing your personal and business credit scores.
This is one of the most important factors that lenders take into account to assess your creditworthiness, potential risks, and your capability to repay the loan.
Keep in mind that each credit bureau (Dun & Bradstreet, Equifax Business, and Experian Business) has its own method for calculating credit score. You can request a copy of your business credit report from each one of them.
Once you receive your report, make sure to check it for accuracy and ensure that there are no errors or discrepancies that may be bringing your score down. If you happen to find any errors, dispute them with the respective credit bureau.
• What is a good business credit score for a large business line of credit?
The higher the amount of the large business line of credit, the riskier it may be for the lender. This means that keeping a good credit score is a must, ideally 80 or above for Dun & Bradstreet PAYDEX. For Equifax, a score of 660 is considered good, while for Experian, we are looking at any score above 75.
• What is a good personal credit score for a large business line of credit?
When applying for a large business line of credit, your personal credit score also matters - the higher your score, the more likely it is for you to get better terms and rates. For Equifax, Experian, and TransUnion, you will need a personal credit score of at least 670 to be considered good, but above 800 can get you higher limits and lower rates.
3. Prepare a strong business plan
Getting a large business line of credit isn’t necessarily easy - you will have to prepare a strong business plan to present to your lender, and convince them that your business is a solid investment.
Your lender will want to see that your business is viable and that you have an adequate strategy in place, taking into account all possible outcomes. When building your business plan, make sure to include:
- An executive summary of your business
- A business description, including industry and target market
- A comprehensive market analysis
- Your business's legal structure and organizational framework
- Your product or service line and the value they provide
- A carefully crafted marketing and sales strategy
- Your funding request, including future financial planning
- Comprehensive financial forecasts
- Analysis of potential risks and challenges
4. Collect your financial documents
Before getting a large business line of credit, the next step you will need to take is to prepare all the documentation that you are going to need during the application process.
In addition to the detailed business plan we mentioned in the previous section, be prepared to show your financial statements (including balance sheets, income statements, cash flow statements) for at least the past 2 years.
Other documents that your lender may want to see include:
- Tax returns
- Bank statements
- Legal documents
- Debt schedule
- Collateral documentation (if it applies)
- Credit report authorization
- Ownership and affiliations
You may also be asked to show your personal financial statements and recent tax returns, especially if you are a small business or a startup.
5. Research lenders
When researching lenders, keep in mind that banks are not your only option for getting a large business line of credit. In fact, traditional lenders may not be the ideal alternative, as they often have longer processing times, stricter qualification criteria, and offer less flexibility.
In addition, the application process with banks is generally more paperwork-intensive, requiring detailed financial statements, business plans, tax returns, and more, which can be time-consuming to compile.
Instead, opt for private credit lenders - they typically use advanced technology and algorithms for the application process, which speeds up the approval and funding of your line of credit.
They offer a more simplified application process and a lot more flexibility when it comes to lending criteria. This means that you may still be able to get a large business line of credit even if you have a less-than-perfect credit score.
6. Apply to multiple lenders
If you are looking to get a large business line of credit, keep in mind that applying to one lender only may not be the best way to go - it will not only limit your chances of approval, but also your terms and rates.
That’s why we recommend applying to multiple lenders. Doing this is easier than you think - instead of sending dozens of applications manually and trying to compare terms and rates on your own, you can apply easily with National Business Capital.
ABOUT THE AUTHOR
As COO, Phil oversees National Business Capital’s funding operations, tech infrastructure, and data intelligence. He breaks down the funding trends that matter most to decision-makers, with a special focus on leadership and CFOs who want to understand where capital is flowing and why it matters.
