Last updated: November 2026
A business line of credit is a revolving limit your company can draw from, repay and draw again without reapplying. You pay interest or fees only on what you have drawn, not on the full limit, which makes a line the natural tool for recurring timing gaps: inventory before a busy season, payroll while invoices are outstanding, or a repair you did not plan for. Banks usually ask for 2 years in business, $100,000 or more in annual revenue and a 660 to 700+ FICO score, and price their lines off the Prime rate. Online lenders often accept 1 year, about $100,000 a year in revenue and a 625 score, but cost considerably more. This guide connects our articles on how revolving credit works, what lines cost, how to get one with fewer strings attached and the alternatives.
How a business line of credit works
The lender approves a maximum limit, say $100,000. Draw $30,000 for inventory and interest runs on $30,000 only. Repay $20,000 and your available credit rises back to $90,000. Two pricing models are common: banks charge a variable rate (Prime plus a margin) on the outstanding balance, usually with an annual fee, while many online lenders turn each draw into a short installment loan of 6 to 24 months with fixed weekly or monthly payments. Our main guide, business line of credit: best lenders, rates and requirements, compares the published amounts, costs and minimums of lenders including Bank of America, Chase, Wells Fargo, Bluevine, American Express and OnDeck, checked in October 2026.
Revolving credit vs. installment credit
A line of credit is one kind of revolving credit, alongside credit cards, personal lines and home equity lines. Installment credit, such as a term loan or equipment loan, pays out once and is repaid on a fixed schedule until the balance reaches zero. What is revolving credit? explains the difference with a worked example, how revolving balances affect credit scores and how to use a revolving line well.
| Business line of credit | Term loan | Business credit card | Trade credit | |
|---|---|---|---|---|
| How you get the money | Draw as needed up to a limit | One lump sum | Card purchases (cash advances cost extra) | Goods or services now, pay the supplier later |
| How you repay | On the drawn balance; credit frees up again | Fixed payments until paid off | Minimum payment or full statement balance | By the invoice due date, often net 30 or net 60 |
| Best for | Recurring timing gaps, seasonal inventory | One-time investments with a long life | Small everyday expenses | Buying from suppliers before customers pay you |
| Watch out for | Annual and draw fees; high online APRs | Prepayment terms | High rates if you carry a balance | Losing early-payment discounts |
Cash credit lines and card cash advances
"Cash credit line" means two different things. On a credit card, it is the part of your limit you can take out as cash; Bank of America uses the term, and other issuers call it a cash access line or cash advance limit. Card cash advances usually carry a fee on each withdrawal, a higher APR and interest from day one. In business banking, especially in India, "cash credit" is a revolving working-capital loan secured by inventory and receivables. Cash credit line meaning sorts out the terms and explains why a business line of credit is usually a cheaper source of cash than a card advance.
Lines of credit without a personal guarantee
Most small business lenders ask the owner to guarantee the debt; in the Federal Reserve's latest survey, 59% of small firms with debt had used a personal guarantee. Credit without one is possible but rare, and usually requires significant cash in the bank (corporate cards such as Ramp and Brex), collateral the lender can rely on, or a large, established business with strong business credit. Business credit line without a personal guarantee covers the real options, who qualifies and how to build business credit over time.
Estimating the cost of a draw
Before you draw, estimate the payment and total interest for the amount, rate and repayment period you expect. Our business credit line calculator guide shows how to run scenarios, how to read the results and what lenders weigh when they set your actual limit and rate. Compare offers on total cost, including annual, maintenance and draw fees, not only on the headline rate.
Trade credit: the line your suppliers give you
Trade credit lets you receive goods or services now and pay the supplier later on agreed terms. It is often the first credit a young business gets, and it costs nothing if you pay on time, but skipping an early-payment discount can be an expensive form of financing. What is a trade credit? explains how terms work, the hidden costs and how trade credit compares with loans and lines of credit.
Alternatives to a line of credit
If a bank line is out of reach, the main alternatives are online lines (Bluevine, the American Express Business Line of Credit, Headway Capital, OnDeck and Fundbox among them), sales-based financing tied to a payment platform such as PayPal, Shopify, Square or Stripe, invoice factoring, equipment financing, SBA loans and revenue-based financing such as a merchant cash advance. Business loan alternatives compares them, including Fundbox, PayPal Working Capital and OnDeck alternatives, with requirements verified in October 2026.
How to qualify for a business line of credit
Lenders look at the same core numbers: personal credit score, time in business, annual revenue and cash flow, and existing debt. Bank lines want the strongest file and offer the lowest cost; online lines accept more but charge more. A newer business can start with a secured or cash-secured line and move to an unsecured line after a record of on-time payments. Have recent bank statements, tax returns and a list of current debts ready before you apply, and keep the draw tied to a short-term need that will repay it.
Comparing lines through FSE
FSE is an independent business funding brokerage that works with a panel of lending partners. One application lets you see which lines and alternatives you qualify for, side by side. To be considered, a business generally needs at least 1 year in business and $10,000 or more in monthly revenue.
Frequently asked questions
Is a business line of credit revolving credit?
Yes. You can draw, repay and draw again up to the limit during the draw period, paying interest only on the outstanding balance. Some online lines instead convert each draw into a short fixed-payment loan.
What credit score do I need for a business line of credit?
Banks generally look for 660 to 700 or higher. Several online lenders publish minimums around 625, with higher costs.
Can I get a line of credit without a personal guarantee?
Sometimes, usually with large cash balances, collateral such as receivables or cash, or an established business credit history. Most small business lines still require one.
Line of credit or term loan?
Use a line for recurring, short-term gaps and a term loan for a one-time investment with a long useful life, such as equipment or a renovation.
Want to see which lines you qualify for? Apply now and compare offers from FSE's lending partners.
How we research, fact-check and update these guides is explained in our editorial standards.