Business line of credit: limits, rates, and how to qualify in 2026

Reviewed by Turan Zeynal, Managing Partner, Outset Funding Partners · Last reviewed August 9, 2026

TL;DR

A business line of credit is a revolving credit limit — typically $10,000 to $250,000 — that you draw from as needed and only pay interest on what you use. Non-bank lines price at 12%–30% APR and fund in 3–10 business days with 600+ FICO, 12+ months in business, and $15,000+ in monthly revenue. Bank lines price cheaper (roughly 9%–16%) but want 680+ FICO, two years of filed returns, and profitability. The line replenishes as you repay, which makes it the right product for uneven receivables, seasonal dips, and repeat inventory buys — and the wrong product for a single large one-time purchase, where a term loan is cheaper.

Quick facts

Credit limits: $10,000 – $250,000 (bank: up to $500k)
APR range: 12% – 30% (bank lines 9% – 16%)
Draw term: 6 – 24 months, renewable
Repayment on a draw: Weekly or monthly, 3 – 18 months
Minimum FICO: 600 (bank: 680+)
Minimum time in business: 12 months
Minimum monthly revenue: $15,000
Funding speed: 3 – 10 business days
Interest on undrawn funds: None

The 60-second answer

The reason a line of credit beats a loan for most operating businesses is simple: you pay for the money only while you're using it. Approve a $100,000 line, draw $20,000 to cover a slow February, repay it in March, and you paid interest on $20,000 for one month — not on $100,000 for 18.

The catch is that lines are underwritten more conservatively than short-term loans. Lenders are extending standing access, so they want 12 months of history and a 600+ FICO before they'll leave a limit open. If you don't clear that bar yet, a working capital loan now plus clean statements for two quarters is the normal path to a line later.

How it works, step by step

1. Confirm you clear the baseline
600+ FICO, 12+ months in business, $15,000+ in monthly deposits, and a US business bank account. Under 600 FICO, a revolving line is rarely approved — look at a short-term working capital loan instead and revisit the line in two quarters.
2. Get pre-qualified on a soft pull
A soft credit pull plus 3–6 months of bank statements is enough to see real limits and pricing. No hard inquiry, no impact on your score, and no obligation. Compare offers on total cost of a typical draw, not on the headline limit — a big unusable limit is worth less than a smaller cheap one.
3. Read the draw fee and the maintenance terms
The three terms that decide real cost: the draw fee (0%–3% each time you pull), any monthly maintenance fee on an undrawn line, and the repayment cadence on a draw (weekly debits hurt more than monthly). A 21% APR line with a 3% draw fee and weekly debits can cost more than a 26% line with none of that.
4. Draw with a repayment event in mind
Every draw should have an answer to "what pays this back, and when." A funded invoice, a seasonal upturn, a receivable dated in 45 days. Draws with no repayment event are how a revolving line quietly becomes permanent debt.
5. Keep utilization under ~50% before renewal
Lenders review usage at renewal. A line that sits maxed reads as distress and gets reduced; a line cycled from 0% to 40% and back reads as healthy and gets increased. Cycling deliberately is the cheapest way to grow your limit.

Pros and cons

Pros

✓Interest only on what you draw — idle capacity costs nothing
✓Replenishes as you repay, so one approval covers many needs
✓Cheaper than an MCA or short-term loan for the same dollars used
✓Standing access removes the scramble when a gap appears
✓On-time revolving history builds business credit faster than a term loan

Cons

×Higher bar than a short-term loan: 600+ FICO and 12 months of history
×Draw fees of 0%–3% can quietly raise effective cost
×Variable rates on bank lines move with prime
×Lenders can reduce or freeze an unused line at review
×Easy to treat as income — the most common way operators over-borrow

Who qualifies

•12+ months in business
•600+ FICO (680+ for bank pricing)
•$15,000+ in monthly revenue
•3–6 months of business bank statements
•No open bankruptcy; tax liens need a documented payment plan
•Positive average daily balance with few NSFs

Line of credit vs the alternatives

Option	When to use	Watch out for
Business line of credit	Recurring or unpredictable gaps; repeat inventory buys	Draw fees; freeze risk on unused lines
Short-term working capital loan	One known amount needed now, 500+ FICO	Interest on the full balance from day one
Business credit card	Under $25k in card-acceptable spend, want points	22%–29% APR and utilization drags personal FICO
Invoice factoring	B2B with slow-paying receivables on the books	Your customers get contacted by the factor
SBA line (CAPLines)	680+ FICO, can wait 30–60 days, want the cheapest rate	Paperwork-heavy; not viable for urgent needs

Frequently asked questions

What credit score do you need for a business line of credit?

600 FICO is the practical minimum for a non-bank revolving line, and 680+ is where bank pricing of roughly 9%–16% opens up. Between 550 and 600, most lenders will offer a short-term working capital loan instead of a line; building 3–6 months of clean deposits and clearing that to 600 is usually faster than waiting for a score to repair.

How much can you get on a business line of credit?

Non-bank lines typically run $10,000 to $250,000, and most approvals land near one month of revenue — a business doing $50,000 a month commonly sees a $40,000–$75,000 limit. Bank lines reach $500,000 or more but are underwritten on filed financials and debt service coverage rather than a revenue multiple.

Is a line of credit cheaper than a merchant cash advance?

Almost always, yes. A 20% APR line used for three months on a $30,000 draw costs roughly $1,000. The same $30,000 as an MCA at a 1.35 factor rate costs $10,500 regardless of how fast you repay, because the fee is fixed rather than time-based. If you qualify for a line, take the line.

Does a business line of credit affect your personal credit?

Applying triggers a soft pull at pre-qualification and usually a hard pull at final approval, which costs a few points temporarily. Most non-bank business lines don't report balances to personal bureaus, so utilization doesn't drag your personal score — but nearly all require a personal guarantee, so a default does reach you personally.

How fast can a business line of credit be approved?

Non-bank lines are approved in 24–72 hours and funded on the first draw within 3–10 business days. Bank and credit union lines take 2–6 weeks. If you need cash inside 72 hours, open the line for future use but bridge the immediate need with a short-term product.

Can you get a line of credit for a business under a year old?

Rarely. Twelve months of operating history is the standard floor because lenders need a deposit pattern to size a limit against. Businesses at 6–11 months generally qualify for short-term working capital or equipment financing instead, then convert to a line once the twelfth month of statements is on file.

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