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How To Find The Best Business Line of Credit [2020]

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Your business is growing, and you constantly have new opportunities and problems to solve. To foot the bills, you need funding, but you’re not sure how much—or if you’ll need more cash next week. You might be asking: what’s the best business line of credit for your business?

Business lines of credit serve as an incredible tool as your business is growing. Because it’s more flexible than most other options on the market, you can make fast decisions as your business moves into new territory.

With countless financing options available at your fingertips, though, finding the best small business line of credit can be challenging. Understanding the process, various lender options and requirements can help you get started on the right foot.

best business line of credit

Understanding How a Business Line of Credit Works

A business line of credit doesn’t have the same clear-cut structure as a small business loan, but it’s not complicated, either.

The advantage of a business line of credit is that it gives the business owner flexibility in how they use funding, and when they get it—while only going through the application process once. As you need more cash, you can draw from the amount you were pre-approved for. And, you’ll only pay interest on what you take, instead of what you qualify for.

After drawing funds, you can put them toward any expense you have, including:

  • Cash flow issues
  • Payroll
  • Marketing
  • New equipment or inventory
  • Expand to a new location
  • Take on more clients

You can use it for any other expense that helps your business grow.

That being said, not all business lines of credit are created equal, and most businesses aren’t necessarily looking for the same thing. To find the best business line of credit, you may have to explore a few options.

Revolving Lines of Credit Gives You Continued Access to Funds

Revolving lines of credit work just like other business lines of credit, but with one important difference. 

When you have a revolving credit line, you don’t lose access to funding after depleting it. As you pay back the balance, new funding will become available.

While revolving credit lines aren’t available through all lenders, it’s something you should ask about. This aspect can be especially useful for businesses that are using funds to generate higher income.

Secured Vs. Unsecured Business Lines of Credit

If you’re looking for the best business line of credit, then it’s important to consider whether it’ll be secured or unsecured.

The difference is simple: secured business lines of credit utilize business assets as collateral by the lender, in the event you default on payments. Unsecured credit lines, on the other hand, don’t.

At first glance, the unsecured option seems like a no-brainer. However, it’s important to remember that securing your credit line helps reduce risk for the lender. In turn, you can qualify for lower rates. 

That being said, an unsecured business line of credit for a startup can help new businesses without existing assets (or those who simply don’t want to jeopardize assets). In other words, this structure makes it possible for young businesses to get a line of credit, where they previously wouldn’t qualify.

Bank Business Lines of Credit: Low Credit Rates, Difficult Process

For most business owners, the bank is the first stop on their search for the best business line of credit. Unfortunately, it’s rarely their last.

If you can qualify for a business line of credit from a bank, then it definitely makes sense to go this route. However, the sky-high requirements and difficult process rarely allow for this to happen.

In order to qualify for the best bank business line of credit, you’ll need to be in business for at least two years and have a profitable business. You’ll also need an excellent credit score and financial history. If you fall short in any of these categories, then you probably won’t be approved.

Because banks thoroughly vet every applicant, it could take months for you to know whether or not you were approved.

That being said, those that do qualify generally won’t be able to find a better business line of credit with lower rates.

Alternative Lenders: Faster Process for Pursuing New Opportunities

Fintech lenders, also known as alternative lenders, have created a faster and easier process that’s better suited to navigating new opportunities. Instead of taking months to review applications, fintech lenders can generally offer options in a few minutes, and sometimes, funding in hours.

Requirements will be much more easy going than banks, making it possible for growing businesses to obtain funding. Through most fintech lenders, you’ll only need two months in business and $120K in annual sales. There are options for all credit profiles, but you may qualify for lower rates with a higher score.

Finding the Best Business Line of Credit: What You Need to Know

In most cases, finding the best 0 interest option is off the table—but that doesn’t mean you can’t still find the best deal.

Online marketplaces have become the best way to get multiple options without shopping around. By showing you potential rates and terms through multiple lenders, you can weigh your options without shopping around. Applying through multiple lenders, on the other hand, could cause a hard credit inquiry—which could negatively impact your credit score, and is something you want to avoid. 

By reviewing multiple options, you can choose the one that works best for your business. You can also find the best small business line of credit rates.

You may even be able to find a business line of credit without a personal guarantee, but this could prove more difficult. In short, a personal guarantee holds you personally liable to repay the balance if your business defaults. Most lenders will require a personal guarantee.

Get The Guidance You Need and the Funding You Deserve

At National, we specialize in helping you complete your application and obtaining same-day funding. Our knowledgeable and experienced Business Financing Advisors will do everything they can help you obtain large business lines of credit and get back to growing your business.

Get started learning your options by applying now!

Last Updated on July 3, 2020

National Business Capital is the #1 FinTech marketplace offering small business loans and services. Harnessing the power of smart technology and even smarter people, we’ve streamlined the approval process to secure over $1 billion in financing for small business owners to date.

Our expert Business Financing Advisors work within our 75+ Lender Marketplace in real time to give you easy access to the best low-interest SBA loans, short and long-term loans and business lines of credit, as well as a full suite of revenue-driving business services.

We strengthen local communities one small business loan at a time. For every deal we fund, we donate 10 meals to Feeding America!

About the Author, Joe Camberato

Joseph Camberato, CEO of National Business Capital, developed a passion for business at a young age. Joe started his company in 2007 in his spare bedroom and has grown to secure over $1 Billion dollars in financing for small business owners nationwide. National’s team has an amazing culture and has been name the #1 Top Workplace on Long Island 3 years in a row and counting. Joe is a trusted financial expert who’s published more than 2,000 articles in the last 3 years. His articles have generated over 5 million page views and has been featured on blogs such as Google News, Yahoo, CNBC, Forbes Magazine, etc. His passion has also inspired him to build the "GrowByJoe” YouTube channel where he shares his insights into small business trends and tips for growth. Joe also holds a seat on Forbes Finance Council and is an active member of the Young Presidents' Organization (YPO), a global leadership community.





Disclaimer: The information and insights in this article are provided for informational purposes only, and do not constitute financial, legal, tax, business or personal advise from National Business Capital and the author. Do no rely on this information as advice and please consult with your financial advisor, accountant and/or attorney before making any decisions. If you rely solely in this information it is at your own risk. The information is true and accurate to the best of our knowledge, but there maybe errors, omissions, or mistakes.