Business Line of Credit | Best Options for 2022


We are processing your information.

Please hold tight for a few seconds!

WE Secured
IN Financing
OWNERS national business capital logo

what is a business line of credit

Business Line of Credit

90% Approval Rate

Draw more cash as you need it with a business line of credit from National. Apply now to get the flexible financing you need as your business grows and speak with a knowledgeable Business Financing Advisor who can accurately answer your questions, explain your options, and work with you from start to finish.
Let's get started

What Is Required for a Business Line of Credit?

Applying and qualifying for a business line of credit can take some effort, but it’s not difficult or time-consuming through our marketplace.

Different lenders have various qualifications, so whether or not you qualify can vary based on where you apply. The benefit of applying through a marketplace is that you can learn your options through a variety of lenders with only one application.

Banks and credit unions typically have more aggressive and demanding qualifications. If your business doesn’t have a spotless financial record, qualifying can be difficult. Even if your application is denied at a bank, you can qualify based on your annual sales at an online lender.

Marketplaces like National are less demanding, focusing on your business and opportunity over factors like history and credit. To qualify for a business line of credit at National, you only need:

Best Business Line of Credit Rates

Months in Business

Line Amount $25,000 – $5Mil

Months in Business


business line of credit time to funding

Time to Fund 24 - 48 Hours

What Is a Business Line of Credit?

A business line of credit gives you access to cash whenever you need it and is an extremely flexible financing option. This type of loan allows you to draw cash from your credit limit as you need it, and only pay interest on what you use.

With revolving lines of credit, more cash will become available as you pay it down. Unlike selling equity, getting a small business loan allows you to maintain business ownership, profits and full control. Business lines of credit are the perfect financing tool when your business is in growth mode and you need access to funds.

 You can also use it to bridge cash flow gaps during seasonal slumps, or as a rainy day fund. There are no restrictions on how you can use it—you can use a business line of credit to cover any costs or opportunities you face.

How Does a Business Line of Credit Work?

Business lines of credit function like credit cards, but with a different structure that’s better suited for small business owners. They’re also better for tax purposes—you can write off interest on a credit line, but not for a personal credit card.

After qualifying for a business line of credit, you’ll receive a total credit limit. You can draw as much or as little as you need from that total limit in any number of installments, and you’re under no obligation to use the full amount.

You can continue to access additional cash as you pay it down. Instead of paying interest on the full credit limit, you’ll only pay interest on what you take. Depending on your lender, you may have a non utilization fee, and may have to pay for the line if you don’t use it. Before signing an agreement, be sure to ask for clear information about any fees. Avoid any agreements without clear, transparent information.

How Does a Revolving Line of Credit Work?

Unlike small business loans, revolving lines of credit work by allowing you to continue accessing additional funds as you pay your balance down and require more cash. In other words, it is a type of loan in which the user can borrow up to their credit again once the debt is repaid. 

Some business lines of credit are revolving, while others aren’t. When you discuss the terms of your agreement, be sure to ask questions and confirm whether or not your line of credit is revolving. Revolving lines of credit are the fastest and easiest way to access additional cash as your business grows. Once you pay down part of the balance, you can draw more cash without reapplying. It’s simple, fast, and easy, and your working capital won’t be limited to your checking account.

For example, say you qualify for a $100,000 line of credit. You borrow the full $100,000, and use the cash to grow your business. You then pay down $50,000 using the revenue you generate, putting both your balance and credit limit at $50,000. With $50,000 paid down, you now have the option to borrow an additional $50,000. There’s no set end date, either. As long as you keep your credit line active, or continue drawing and paying it down, you can utilize an LOC for months, or even years. If you’re not actively using it, though, your small business line may expire.

National’s Streamlined 75+ Lender Marketplace

There’s a better way to fund your business as it grows.

Find the best line of credit and explore other business loan options available through one streamlined application. Access the best unsecured and revolving lines of credit on the market.

Compare interest rates, terms, and funding amounts on our platform with guidance from an expert.

Apply in less than a minute. Hear your options explained within minutes.

Get funded in as little as 2 hours.

Get Started

The Difference Between a Line of Credit and Small Business Loan

What’s the difference between a line of credit and a small business loan? Both provide your business with the cash you need to grow, but the way these products are structured is different. When you apply for a small business loan, you receive the full amount you qualify for in one lump sum deposit.

A line of credit, on the other hand, offers more flexibility than most loans and cash advances. Instead, you have the option to draw cash in increments, and continue drawing more until you reach your credit limit. Typically, lines of credit have lower interest rates and closing costs, which can make them more cost-effective. Small business loans are the better choice when you’re taking on a huge project with defined expenses. Lines of credit, however, can be better as a flexible backup to cover unexpected costs, or as a backup for your bank account.

Line of Credit vs. Loan

  Loan Line of Credit
Repayment Schedule Fixed payment schedule. You will be given a set amount of cash, which you must repay within a set timeframe. Business loan payments usually follow a predetermined schedule, ranging from daily to monthly. No defined terms, less rigid. As you repay the balance, your credit limit will be replenished. This means you can continue to draw from it up until your new credit limit, without reapplying or receiving approval.
APR and Fees Can feature higher rates Typically have lower interest rates and closing costs, which can make them more cost-effective.
Requirements Require you to pay back your principal plus interest over a set period of time, which is determined in the initial agreement. Offers more flexibility and tend to be more relaxed, as financing amounts tend to be lower.
Funding size Normally feature larger funding amounts. Typically lower funding amounts.
Uses Used to finance large, one-off purchases or investments. Give you more flexibility, especially when it comes to managing unexpected expenses or meeting ongoing needs.
Reapplying If you find your loan was not enough and that you need more capital, you’ll have to reapply for additional funds. Frees up capital to reuse as you make payments towards your debt.

Secured Vs. Unsecured Business Line of Credit

A business line of credit can either be secured or unsecured. The difference depends on whether or not your lender requires you to put up collateral.

Secured lines of credit are backed by collateral, while unsecured credit lines are not. To lower their risk, some lenders require that borrowers put up collateral, such as real estate, receivables, inventory, equipment, or their home.

However, putting up your home as collateral puts both your personal and business lives at risk. For this reason, it’s usually not a wise choice. Backing your financing with collateral simply gives the lender confidence in the event you default. Years ago, it was difficult for a small business owner to qualify for an unsecured line of credit, especially through traditional lenders.

Through the new world of online lending, small business owners can qualify for multiple unsecured line of credit options and compare rates. While they don’t require collateral, unsecured options may have slightly higher rates due to the lender’s increased risk.

By putting up collateral and opting for a secured line of credit, you may qualify for a higher approval. That being said, you can usually still qualify for a competitive unsecured line of credit based only on your annual sales—even with personal credit challenges.

Business Credit Cards Vs. Business Line of Credit

What’s the difference between business credit cards and business lines of credit? Fundamentally, credit cards and lines of credit are similar—they give you the ability to handle expenses when you need to.

Both financing products only charge interest on what you use, rather than your total credit limit, but the interest is structured differently. However, a business line of credit is the ideal option for your small business if you’re growing or solving challenges and you need a lower-cost solution.

Usually, only about 3% of your minimum monthly credit card payment goes toward principal. Over time, this can add up to be quite expensive. Lines of credit, on the other hand, typically have lower interest rates and better amortization schedules. Overall, this normally adds up to a lower total cost.

Credit cards are primarily transactional, meaning you can only use them to make purchases. It’s possible to borrow cash using a credit card, but this can be expensive. On the other hand, lines of credit give you the ability to instantly draw cash as you cover expenses and manage working capital.

If you’re debating between getting a credit card vs. a business line of credit, you should also consider fees. Some credit cards involve hefty interest rates. In most cases, these costs will outweigh the draw fees you may or may not pay with a line of credit. If you opt for a business line of credit, you won’t accrue rewards like you would with a credit card.

However, you can maximize the value of both financing options by spending with your credit card to accumulate rewards, then paying the balance down with a line of credit.

Can You Use a Business Line of Credit for Anything?

Lines of credit are intended to be flexible financing options custom-tailored to your needs. You can use them to cover expenses that are weighing your business down, or pursue exciting new growth opportunities. There are no restrictions on how you must spend this money— you can put it toward any expenses. Some of the most common ways that businesses utilize this business financing option include:

Grow Your Business

Ramp up your business and cover the expenses needed to expand hiring, payroll, take on new jobs, and more.

Operating Costs

Always have cash on hand for rent, utilities, and other costs required to keep your business going on a day-to-day basis.

Marketing Campaigns

Drum up new business and take on more customers with additional marketing campaigns in the mix.

Seasonal Slow Periods

Get the capital you need to keep your business moving during seasonal slow periods.

Inventory or Supplies

Purchase additional inventory or supplies to capitalize on busy periods and new opportunities.


Keep a reservoir of funding to cover the costs of payroll, especially with slow-paying clients.

Access to a line of credit is like having cash on demand. The second you need cash, you can draw from your line of credit and get things moving.
You may also have to provide a personal guarantee, which is standard with most types of business financing, and is similar to a personal guarantee you already have with your credit cards.
small business loans application

1 year in business

Even as a young, growing business, you can still find financing options

fastest small business loans

$120K in annual revenue

To qualify, your business must be generating a minimum of $10,000 monthly revenue

learn about small business loans

600+ credit score

We have financing options for businesses with excellent and bad credit.

Applying for a Business Line of Credit

Applying for a line of credit is easy, and simply learning your options won’t affect your credit score. Here’s how it works:

Fast-loan application

1 Apply

Fill out our simple 60-second application to begin the process. Then, complete your online application by connecting your bank statements through our bank-grade portal in under 3 minutes

competitive loan offers


Consider multiple loan options available within our marketplace. Hear your options explained by a knowledgeable Business Financing Advisor, and ask any questions you have.

business loans flexible terms

3Get Funded

Select the best option available and get funded in as little as a few hours. Start using your cash to grow your business right away, without restrictions on how you can use the funds.

We educate you on the best options available in our platform to ensure you get the best line of credit available.

How Do Interest Payments Work?

Most business owners prefer a line of credit over other options because of how interest rates are structured. Rather than charging on the total approval amount, you’ll only pay interest on what you take. Using the previous example, let’s say you qualify for a $100,000 business line of credit, and draw $50,000. You’d be charged interest and principle only on the $50,000 you drew, rather than the $100,000 you were approved for. This structure allows you to keep your line of credit on the sidelines for when you need it, without worrying about excessive interest.

What Is a Typical Interest Rate for a Business Line of Credit?

Interest rates for your business line of credit aren’t as straightforward as the way interest is structured. Rates can depend on a number of factors about both your business and the lender you choose.

Applying through a direct lender means there’s only one option you could potentially qualify for, while applying at a marketplace leaves the door open to several potential options, ensuring you find the best one.

It’s easy to calculate monthly payments based on an estimated rate. Let’s say you qualified for a business line of credit at 6% interest and drew $50,000. The interest would be amortized over 12 months. Typically, in this example, your total interest paid over the course of the term would be $3,000, but can vary depending on how the lender structures it. That means your monthly interest payments would be $3,000 divided by 12, which is $250 per month that your balance is outstanding. You can find your expected monthly payments based on a fixed interest rate using our business line of credit calculator.

Small Business Credit Line Benefits

A business line of credit can be a powerful tool in your back pocket. The flexibility allows you to draw funds whenever you need them and stay one step ahead of the latest challenge in your business—a priceless opportunity for any entrepreneur. Here are a few of the many benefits of leveraging a business line of credit in your operation:

  • Fast access to cash
  • Only pay interest on what you draw
  • Might not need to offer collateral
  • Manage your working capital, short-term projects, and other expenses
  • Strengthen your business credit

Term loans, SBA loans, and other traditional financing products provide you with a set amount of money that you must repay throughout the term outlined by your lender. If you wind up needing more than you originally anticipated, you’ll have to take out an additional loan on top of your previous financing, which can quickly become difficult to manage. A business line of credit is a way around this challenge—the structure allows you to draw as much as you need from your total credit line without having to worry about taking out additional financing to afford your growth plans. 

Choosing a business line of credit over another financing solution could also help you save money on interest. If you were to secure a term loan to meet your needs, you’d have to pay interest on the total borrowed amount, whereas you only pay on what you use with a business line of credit. Plus, making consistent, timely payments on your credit line will work to strengthen your business credit score, which is a priceless opportunity that all entrepreneurs should take advantage of. 

The real benefit of any business financing option is the ability to set your plans into motion and take your business to the next level. A business line of credit can allow you to take advantage of new opportunities, manage your working capital, and much more, allowing you to grow your operation and win business back from the competition. 

What Are The Benefits of a Business Line of Credit?

Fast, Simple Funding Process

TRUE Line of Credit

Get cash on hand, and draw more whenever you need it.


Pay As You Go

Never over-borrow—only pay for what you take.


Immediate Access

Seize new opportunities or cover expenses now.

How Can You Use Your Business Line of Credit?

There are no restrictions—use your capital to pursue any opportunity or overcome any challenge! 

Business Growth

Buy new equipment or inventory, hire new staff, or prepare for seasonal changes.

Business Expenses

Get extra working capital to manage payroll, bridge gaps in cash flow, or pay bills.

Business Opportunites

Expand or open a second location, take on more clients, or capitalize on bulk order discounts.

What is the best Business Line of Credit in 2022?

Benefits of National Business Capital:

  Bank Direct Lenders table-logo
Paperwork - 2-3 Years Tax Return
- 2-3 years Financials
- 3-6 Months Bank Statements
- 1 Year Tax Return
- 1 year Financials
- 3 Months Bank Statements
- No Tax Returns Required
Application - Lengthy
- Paper Intensive
Multi-page Paper
- One page - One Minute
- DocuSign®
Number of Lenders 1 1 75+
Service Level Processor Programmatic Personal Advisor
Approval Process Weeks/Months Days/Weeks Hours/Days
Speed to Funding Months Days/Weeks Hours/Days
Collateral Requirements Always Sometimes Required Not Necessary
Business Profitability Last 2 Years Sometimes Required Not Necessary
Credit Score 680+FICO 600+FICO No Minimum FICO
Credit Check Hard Pull Hard Pull Soft Pull

Ready to Learn Your Options?

Understanding the Loan Application Process

National’s simplified small business loan application process removes the usual pain and frustration, while giving you more options to choose from.


1 Apply

Fill out our simple 60-second application to begin the process. Then, complete your online application by connecting your bank statements through our bank-grade portal in under 3 minutes.


2 Review

Consider multiple loan options available within our marketplace. Hear your options explained by a knowledgeable Business Financing Advisor, and ask any questions you have.

Get Funded

3Get Funded

Select the best option available and get funded in as little as a few hours. Start using your cash to grow your business right away, without restrictions on how you can use the funds.