Skip to content

Line of Credit for Startup Business: If you own a startup, you may have difficulty obtaining traditional financing because you haven’t been in business for very long or have little business credit.
However, you will still require capital to launch your business, renovate your space, or hire employees.
In that case, an unsecured business line of credit for startups could be a viable option.

Line of Credit for Startup Business

A business startup loan is a type of financing designed to assist a new business with its financial needs.
Working capital; the purchase of equipment, machinery, supplies, inventory, and furniture; and the purchase of construction equipment or real estate are all examples of how business startup loan proceeds can be used.
Among other options, new business owners can consider business credit cards, certain SBA loans, and crowdfunding.

Obtaining the capital required to support a new small business’s initial growth is one of the most difficult challenges it must face.
According to a 2020 Federal Reserve report, new employer small businesses are the primary source of job growth in the United States, but they are much more likely than larger firms to face financial challenges in accessing borrowed capital.
To proudly display your physical or metaphorical “open for business” sign, you may require funding in the form of a small business startup loan.

If you’ve already begun your loan search, you’re well aware that there are a seemingly infinite number of small business loan options available from banks and online lenders.
Each will have its own set of advantages and disadvantages, and you may have discovered that most of the low-cost options are not available to new business owners without a couple years of experience, strong credit, and/or solid revenues.

While a bank loan may be your first choice, a traditional loan will be out of reach for the majority of startup businesses.
Banks have stringent small business lending standards, and what they offer is frequently inaccessible to start-ups.
If you have a solid business plan in an industry that the bank serves, you may be able to work with your bank to secure equipment financing or other types of business funding.
If you are unable to obtain a bank loan for startup costs, you should consider the following lending partners:

How Can I Get a Startup Business Loan Even if I Have Bad Credit?

Lenders will have to rely on your credit scores to help determine their level of risk if you don’t have at least two years in business and strong revenues.

Business Loan Even if I Have Bad Credit

A business owner with bad credit will have a difficult time qualifying for almost any loan.
Many of the microloan and crowdfunding options, on the other hand, are worth investigating because they may be available to business owners with bad or no credit.

The Difference Between Secured and Unsecured Business Lines of Credit

Before we discuss obtaining an unsecured business line of credit, let us first examine the distinctions between secured and unsecured business lines of credit, as well as what a line of credit is.

You are approved for a maximum amount of funds with either type of small business credit line, unsecured or secured.
You can withdraw money from that line of credit up to the maximum amount and then repay it.
In contrast, a loan provides you with a lump sum of money that you must repay over time.

For example, if a person is approved for a $10,000 line of credit, they could withdraw $1,000 now and pay it back, and then $8,000 later when the money is needed.
Whatever is repaid may be borrowed again.

Secured and Unsecured Business Lines of Credit

A secured line of credit necessitates the use of collateral as security against the loan.
It could be a down payment or an asset such as real estate or equipment.
A secured line of credit may have lower interest rates than an unsecured line of credit because, given the security provided, it is generally regarded as less risky.

If you are unable to repay what you have borrowed, the lender may seize your asset as collateral to cover the debt.

An unsecured line of credit, on the other hand, does not require collateral.
It may be more difficult to obtain approval for because lenders may have stricter criteria for applicants than with a secured loan, such as higher credit score and revenue history requirements.

Because you may not have assets to use as collateral for secured lines of credit as a startup, an unsecured business line of credit may be a better fit.

How Do I Obtain a Business Loan to Begin a Business?

You know where you want to go, but how do you get there?
A good place to start is with your personal credit scores and business credit scores, which are indicators of your company’s creditworthiness.
Nav allows you to check both your business and personal credit scores.
A good credit score can put you in a much better position than a bad credit score, so if you want to improve your business credit score, you must be willing to put in the effort.

It’s also important to consider your company from the lender’s point of view:

  • How dangerous is the type of business you’re launching?
  • What is your background or area of expertise?
  • What is your credit history?
  • How quickly will the company turn a profit?
  • Is there any equipment or assets that can be liquidated if the business fails?

Many of these questions can be answered by a well-crafted business plan.

You’ll then need to decide what kind of startup financing you want.
Before you begin gathering documentation for your business, you should understand what the lender will be looking for; an application for a microloan will most likely be very different from one for a business credit card.

Calculating the Amount of Funding Required

Begin by asking yourself, “What do I need the money for?”

Let’s call your response your “loan purpose.”
Calculate how much it will cost to meet your loan purpose, and that is the amount you should be looking for.
If you can clearly articulate your loan purpose to a lender, a crowd funding campaign, the SBA, or your uncle Fred, you are more likely to get the money you require rather than simply looking for “as much as I can get.”
Furthermore, you will avoid the financial stress and consequences of borrowing more than you need.

What Are the Prerequisites for Obtaining a Small Business Loan?

The requirements vary greatly depending on the lender, but you should be prepared with the following:

  • Updated business plan with information on your expansion and marketing strategies
  • All three major credit bureaus provide personal credit reports and scores.
    (The lender will obtain their own copies, but you should double-check first.)
  • A business forecast that includes information on future cash flow and costs.
  • Returns and supporting IRS documents for your business (if applicable) and personal tax accounts (including personal documents for all owners or registered agents of the business).
  • Any licenses and registrations required to conduct business in your state.
  • All financial documents that might be considered relevant (including bank statements, credit card sales, unpaid invoices, and accounts receivable due to you, if available).
  • Any legal agreements that might be relevant (franchise, incorporation, leasing).

Prerequisites for Obtaining a Small Business Loan


You may not have business credit reports or even business tax returns as a startup company.
The lender may then rely on personal credit, tax returns, and/or a personal financial statement.
If, on the other hand, you are buying an existing business, the lender will almost certainly want to know about it.

You may need to be patient after submitting the application.
Some financing options can be approved in minutes, while others may take weeks or even months to complete.
Before you begin the application process, make sure you are aware of the wait time.
You don’t want to put your urgent business needs on hold or miss an obligation while you wait for a loan to be approved.

Unsecured Business Lines of Credit Lenders

Now, we’ll take a look at a few brands that provide unsecured business lines of credit to startups.
A chart with key information about each lender is provided below.

Rates start at:
Minimum Time in Business
Credit Score Required
Line of Credit Limits
3 years
Wells Fargo
Prime + 1.75%
BusinessLine®: 2+ years; Small Business Advantage®: less than 2
Information not publicly available
2-3 months
SunWise Capital
12.99% to 15.99%
1 year
1 year


In addition to business checking and invoice factoring, BlueVine offers small business unsecured lines of credit to startups.
According to their website, their application can be completed in as little as five minutes, and funds can be deposited into your account within hours of approval.


Quick application and approval process

In addition, business checking and invoice factoring are available.

The disadvantages

The required time in business (3 years) may be longer than some startups have.

Each draw on the line of credit has a short repayment period (6 or 12 months)

BlueVine Business Lines of Credit Requirements

Applicants must meet the following requirements in order to be considered for financing through BlueVine:

650 and up FICO® Score three or more years in business $40,000 in monthly revenue

Wells Fargo

Wells Fargo provides two unsecured startup business lines of credit: the BusinessLine® and the Small Business Advantage®.
They differ slightly in terms of the amounts available and the guarantor requirements, but neither requires collateral.


Both product lines include a Mastercard® access card.

Both have a unique rewards program.

The disadvantages

Fees for some credit lines range between $95 and $175. (waived first year)

For ATM and over-the-counter transactions using the BusinessLine Mastercard, there is a 3% fee.

Wells Fargo Business Lines of Credit Requirements

Wells Fargo Small Business Advantage® line of credit is available to for-profit businesses, and potential borrowers must have household personal liquid assets of less than $200,000.
They must also meet the SBA’s requirements for a small business.

Personal guarantees are required for the BusinessLine® from any owner with a 25 percent stake in the company and a minimum combined aggregate of 51 percent.
Personal guarantees from each owner who owns 20% or more of the company are required for Small Business Advantage®.


Fundbox provides no-doc business line of credit options (which means the application process is simple and requires applicants to provide little to no documentation), which may appeal to startups with lower credit scores who are struggling to meet the minimum eligibility requirements required by other lenders.


Funds can be accessed as soon as the next day.

To qualify, a relatively low credit score (500) is required.

The disadvantages

Only 12 or 24-week repayment terms are available.

Weekly payments are required

Fundbox Business Lines of Credit Requirements

To be eligible for Fundbox financing, potential borrowers must have a business checking account with three or more months of transactions or two or more months of activity in a supported accounting software platform.
The minimum credit score required is 500.
Applicants must also have $50,000 in annual revenue, but this is not necessarily a disqualifier.

SunWise Capital

SunWise Capital is another option for small business unsecured lines of credit.
Its unsecured lines require a minimum of one year in business.


It does not appear on your personal credit report.

Approval can be obtained in as little as 24 to 48 hours.

After approval, funding could be available in as little as two weeks.

The disadvantages

Payback period: 5-21 months

Payments must be made on a daily or weekly basis.

SunWise Business Lines of Credit Requirements

SunWise credit line requirements may be more accessible to more startups:

Annual revenue of at least $150,000

A credit score of 700 is required.

Minimum of one year in business


OnDeck is the final lender in this roundup of unsecured startup business line of credit options.
Its line of credit has no prepayment penalty and the option to increase your credit limit if you meet certain criteria.
Important: Unlike other options, OnDeck charges a $20 monthly maintenance fee, which is waived for the first six months if you withdraw $5,000 or more within one week of opening your line.


Depending on the terms, they provide Instant Funding.
This means that cash is available quickly, even when banks are closed.

Based on qualifications, it is possible to get a credit line increase over time.

The disadvantages

A monthly maintenance fee is charged.

Payments are made on a weekly basis.

OnDeck Lines of Credit Requirements

Applicants must have been in business for at least one year and have at least $100,000 in annual revenue to qualify for an OnDeck line of credit.
You must also have a FICO® score of 600 or higher.

Lendio: Best overall startup business credit line

Lendio’s lending marketplace allows you to compare LOC offers from various lenders, giving you confidence that you’re getting the best one.

Almost every startup should begin its search for a line of credit with Lendio.
It is at the top of these rankings for the same reason that it is at the top of our list of the best small-business loans:
Lendio makes comparing loan and LOC offers ridiculously simple.

Lendio is a marketplace for lending, not a lender.
What does this imply for you?
Simply put, you need to submit a single LOC application to Lendio, and it will return several offers from various lenders.
You can compare which lender has the best terms, the best APR, the highest credit limit, or whatever else you want, and then apply with that lender.

And, because Lendio’s marketplace includes some of the lenders listed below, there’s no reason not to start your line of credit journey with Lendio.

(As an added bonus, Lendio is one of only two lenders on this list (the other is Fundbox) that requires less than a year of business history.)

Kabbage is the most convenient.

Kabbage provides a simple, automated approval process as well as three ways to access your new line of credit.

Time is money, and busy business owners can’t afford to waste it.
Unfortunately, between waiting to be approved and waiting to be funded, obtaining a LOC can be time consuming.
And what if you don’t have the time?
Perhaps Kabbage is more your style.

Kabbage (like Fundbox) employs an automated approval process that can respond to your application within minutes, eliminating the need for you to sit around and wait.
After you’ve been approved, Kabbage provides you with three options for drawing on your LOC, allowing you to choose what works best for you.
(If you use PayPal, you can get your money almost immediately.)

If you like things that are quick, easy, and convenient, we think you’ll like Kabbage.

StreetShares: The best option for longer repayment terms.

While most lenders have LOC terms of one year or less, StreetShares allows you to repay your LOC over a longer period of time—up to three years.

Of course, it’s nice to be able to take your time from time to time.
Many lenders impose strict repayment terms, so even the largest draw from your LOC must be repaid within a year (or even less).
But there’s also StreetShares.

With repayment terms of up to 36 months, StreetShares has the longest repayment terms we’ve seen on startup lines of credit.
That’s three years, which could mean lower monthly payments for you.
Good deal, right? (When it comes to good deals, StreetShares guarantees to match LOC price offers from other lenders—or it will give you a $100 Amazon gift card.)

Time is on your side with StreetShares’ long repayment terms.

Flat Rate Credit Card Processing

Free Checking Account No Credit Check No Deposit

Startups’ Alternatives to Unsecured Business Lines of Credit

It may be difficult for some startups to qualify for an unsecured line of credit.
Here are a few other options that startups may have.

Startups' Alternatives to Unsecured Business Lines of Credit

Credit Cards for Businesses

Business credit cards can provide new business owners with the cash they require.
They can also be a useful tool in assisting business owners in separating their personal finances from their business finances.
Credit card companies will typically look at things like your personal credit score and income.
Some alternatives may necessitate collateral or a personal guarantee.


The Microloan Program of the United States Small Business Administration (SBA) provides loans of up to $50,000 to certain eligible small businesses.
This program’s microloans can be used to finance items such as working capital, inventory, furniture, and machinery or equipment.


There are numerous crowdfunding platforms available online that allow business owners to raise funds to support their operations.
Crowdfunding comes in a variety of forms, but in general, this process allows crowdfunders to raise funds for their project without incurring additional debt.
Take a look at Lantern’s comprehensive crowdfunding guide for a more in-depth look at crowdfunding.

Financing for Equipment

Equipment financing may be advantageous for businesses in need of new or used equipment.
Because the equipment serves as collateral in this type of loan, the lending requirements may be less stringent than in unsecured loans.
Potential borrowers may be able to finance up to 100 percent of the cost of the equipment, depending on the lender.
There are also options that allow you to lease or borrow.


What kinds of fees are there on credit lines?

Many credit lines have origination fees.
Some companies also charge an annual fee.
You may also be charged for cash advances or monthly maintenance fees.
Inquire with your lender about the specifics of your line of credit.

Why should you get a line of credit rather than a business credit card?

There are a few reasons why you should apply for a business line of credit rather than a business credit card.
To begin with, LOCs are intended to make cash advances simple and affordable; credit cards typically charge high fees for cash advances.
And, as previously stated, lines of credit typically have lower APRs than credit cards, as well as longer repayment terms.

In general, lines of credit are best for larger working capital needs, such as equipment purchases, bills, and business upgrades, whereas credit cards are best for smaller business expenses, such as employee lunches and office supplies.

When should I not obtain a line of credit?

Some lenders will not work with companies in specific industries (such as gambling, adult entertainment, and marijuana).
If you work in one of those industries, you won’t be able to get a business line of credit, so don’t waste your time applying.

However, the reasons most businesses should not obtain a business line of credit are the same as the reasons they should not obtain other types of financing: they cannot afford it.
If you can’t budget for payments on your line of credit (including interest), you’ll simply dig yourself into a (debt) hole you can’t get out of.
Make certain that you can afford your LOC.

What credit lines are available to more established businesses?

Our list of the best business lines of credit includes options for companies at various stages of development.
However, regardless of the stage of your business, we recommend Lendio as your first stop.

What other sources of business funding should I look into?

  • Revolving lines of credit are great, but you also have a variety of other viable financing options:
  • Loans with a fixed repayment schedule
  • Finance for equipment
  • Factoring of invoices
  • Credit cards for businesses
  • Investors in the form of angels
  • Investors in venture capital
  • Loans for individuals

What is the procedure for obtaining an unsecured business line of credit?

The requirements for unsecured business lines of credit vary by lender, but in general, you’ll need information about your business, personal details, a government-issued photo ID, and financial statements to apply.
This type of financing is not available to every business.

How do I obtain a credit line for my new business?

Knowing how much you need to borrow, your credit score, and your annual earnings are all good places to start.
This may be useful as you look for the best line of credit terms.

How can I obtain a $250,000 unsecured line of credit for my company?

Each lender has a different limit for credit lines, so shop around for one that offers $250,000 or more, then review the requirements to see if you qualify.

What exactly is an unsecured business line of credit?

Unlike a secured line of credit, which requires collateral such as a down payment or an asset such as real estate, an unsecured line of credit does not.

How do I apply for a small business unsecured line of credit?

The requirements differ from lender to lender, but you may need to meet eligibility standards such as a minimum time in business, a certain threshold of annual revenue, and a minimum credit score.

What banks offer unsecured business credit lines?

Unsecured business lines of credit are available from banks as well as online lenders such as the ones listed here (BlueVine, Wells Fargo, Fundbox, SunWise Capital, and OnDeck).


  • Loan Amounts: $10,000 – $250,000 Terms: 0% interest, first 6-12 months Repayment:
  • We’re 100% focused on small business owners like yourself. (
  • Fundbox 4.66% drawing rate 3 mos. (
  • Both types may come with an interest rate discount of 0.25%, 0.50% or 0.75%, depending on your three-month average combined balances in Bank of America business deposit accounts and/or Merrill Edge® or Merrill Lynch® business investment accounts. (
  • While some banks and alternative online lenders include minimum credit score requirements of 500, you’re much more likely to receive a business line of credit if your credit score is at 620 or higher.
  • The interest rates associated with a business line of credit are usually between 1-3 percent.
  • You will be able to receive anywhere from 70-90 percent of the total value of the invoices, which gives you much-needed working capital. (
  • And maybe you already have FitSmallBusiness claims that 47% of small businesses have opened a line of credit.
  • Terms are usually annual with an interest rate based on the prime rate, plus 1% to 3%. (
  • The average range is from 7% to 25%. (

Line of Credit for Startup Business