If you are a small business owner and are in dire need of capital, ‘small business lines of credit’ are the best option for you. From the ease of access to capital to the most competitive interest rates, lines of credit offer an array of benefits to those in need.
There are several lines of credit options out there but most of them require heavy collateral making it difficult for small business owners to qualify for them. Considering such restraints we have rounded up all the competitive small business lines of credit for you here in this article. But before hopping into the depth, let’s understand what lines of credits actually are and how useful they are for small business owners.
What Is A Line Of Credit?
A line of credit refers to a flexible loan that you can get from banking institutions or financial institutions. Quite similar to many credit tools, the line of credit funds enables you to meet your expenses for a specific time period.
The lines of credit work similar to that of credit cards; they will offer you a limited sum of funds for a limited time period. So, long story short, a line of credit is an amount of money that a financial institution offers for a limited period of time.
You can access a line of credit when needed and repay it immediately in the time period that is being decided by the loan provider.
The only drawback that financial experts reveal about this credit tool is, the interest rate for the line of credit is often variable making it difficult for the loan holder to calculate what the loan would cost at the end.
Lines of credit can be counted on if a person doesn’t afford to borrow a loan every month. Instead of asking for a loan every time, and meeting the long long process of paperwork, counting on small lines of credit and paying them back immediately is a good option.
For small business owners especially, these credit tools can help overcome the deficits by making it easier for them to add to the capital.
Best Small Business Lines Of Credit You Can Count On In 2022
Based on ease of access to capital, interest rates, collaterals, repayment terms, and fast funding, here we have picked the top 5 small business lines of credit for people who are looking for urgent funding to sustain their small ventures.
Best Line Of Credit Number One: Fundbox
Fundbox has secured the first spot in our list of best small business lines of credit following its, simple application process, funding speeds, and lenient requirements.
It is the best fit for small business owners who are newbies and are looking for short-term loans. The company offers short-term credit on very lenient terms enabling the small business owners to easily qualify for the loans.
Some of the basic requirements you need to meet are, you must present proof of being in the business for at least 6 months and a minimum credit score of 600.
The repayment terms identified by the company are shorter and may extend to 24 weeks only. Following the short terms, you will be required to pay the burrowed amount quickly thus the interest rates are also higher than many of its competitors. This was the only drawback we were able to identify for Fundbox.
Best Line Of Credit Number Two: TD Bank
Considering its competitive rates, interest-only payments feature, and simple online application process, we have placed TD Bank in the second spot of our best small business lines of credit list.
This company enables small business owners to secure a sum of up to $100,000 in unsecured financing. Another perk that would surprise you is, it just takes five business days or less to approve credit worth $100,000.
Further, the company is counted among the very few lenders who allow the loan holders to pay just interest on a line of credit. This facility helps small business owners overcome the cash flow deficits in the learner revenue cycles.
The only drawback of this company we were able to spot was the physical presence. TD Bank is located in just 16 states of the country and applicants must be located in these states. Here it is also worth mentioning that, for a line of credit amount exceeding $100,000, you will be required to visit a TD bank branch.
Best Line Of Credit Number Three: BlueVine
BlueVine is another best option for people, who are looking for competitive rates, fast funding, and a simple application process. One of the best features that make BlueVine get a spot among the best small business lines of credit companies is, the approval and funding process of an application gets completed in a single day.
Also, it just requires a business owner to be in business for as little as six months to be eligible for the credit facility.
The only drawbacks of BlueVine are, it requires you to have higher minimum revenue and return the amount in a relatively shorter time period.
To be eligible for a line of credit you must have a minimum credit score of 600 and your annual revenue must not be under $120,000. You will be liable to return the loan in six to 12 months.
Best Line Of Credit Number Four: US Bank
The lines of credit options offered by US Bank are the best fit for business owners who have an established business. You can get funding of up to $100,000 unsecured and $250,000 secured following this credit line option.
To be eligible for the funding, you will be required to be in the line of business for at least 2 years. Also, the lender will also require you to present a minimum credit score of 680. It takes a maximum of 5 days to get the funding approval if you meet all the loan requirements.
Another perk that this credit company offer is, you can lock your interest rate on the current line balances. Your interest rate will remain the same despite the overall interest rate increases.
The company would also not ask you to provide an annual fee on amounts above $50,000. If you are eyeing applying for an amount below $50,000, you will be liable to pay an annual fee of $150.
Best Line Of Credit Number Five: OnDeck
The last pick for our best Small Business Lines Of Credit provider is OnDeck. The fast funding features, easy requirements, and simple online application procedure make it a good option to consider.
The company can provide a maximum sum of $100,000 for the repayment term of 12 months. To be eligible for the line of credit, the business owner has to be in the business for at least one year. You are also required to have a minimum credit score of 600. Furthermore, minimum annual revenue of $100,000 is enough to be able to qualify for the loan of credit.
The only drawbacks for the company are its high-interest rates and additional origination fee. The origination fee will cost you $20 every month and you will have to pay an interest rate of 35% APR.
One other notable benefit that OnDeck provides is, it enables the businesses with less-than-optimal credit to get the required capital in a single day.
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The Bottom Line
To newbie business owners who are struggling to get a line of credit for themselves, relying on an alternative lender can be of great help. As compared to the traditional lenders, alternative lenders will provide you a line of credit despite poor credit scores (if any). However, these alternative lenders will charge you higher interest. Thus, it is important to shop around multiple options before finalizing an option.
