Disclaimer: Information in the business line of credit articles is provided for general information only, does not constitute financial advice, and does not necessarily describe Biz2Credit commercial financing products. In fact, information in the business line of credit articles often covers financial products that Biz2Credit does not currently offer.

Small businesses need access to additional capital from time to time. Startups and small business owners with bad credit may struggle to qualify for traditional short-term or long-term business loans. This type of business financing often requires collateral to secure the loan in the form of business assets or personal finances.

A better alternative for many businesses is to get an unsecured business line of credit. This funding option is available to virtually any business and can be a vital lifeline when you need cash fast.

In this article:

• Learn what an unsecured business line of credit is and how to get a line of credit for business.
• Understand how you can use an unsecured line of credit.
• Explore six of the best unsecured business line of credit

What is an unsecured business line of credit?

A business line of credit is a financing option that’s part term loan, part business credit card. When you get a line of credit for business, you’ll have access to a maximum credit amount that you can draw upon to make business purchases. Unlike a loan, however, you only pay interest on the amount you use, rather than the full amount. Once you repay what you’ve used, you’ll have access to the full amount again, because it’s a revolving line of credit.

You can often get a business line of credit with no collateral (pending credit approval), making it an appealing option for new businesses and business owners with a poor credit history. Like unsecured business credit cards, an unsecured line of credit is a cash equivalent, allowing you to draw money directly into your business bank account.

An unsecured business line of credit works just like a regular line of credit, except the application process and eligibility requirements are a bit easier. Depending on the lender, some businesses may have to put up collateral to get a line of credit, but business owners with a good personal credit score or strong annual revenues can often avoid personal guarantees or collateral.

Even business owners with bad credit, however, could qualify for an unsecured business line of credit. If they do, it can be a good way to improve credit and build a business credit score.

How to get an unsecured business line of credit?

The process to get an unsecured business line of credit varies a bit between lenders, but it’s typically fairly straightforward.

1. Determine how much you need: Whether you need to increase cash flow to cover emergency expenses or you need working capital to get through a seasonal slowdown, don’t borrow more than you need. Business lines of credit have higher interest rates, so you must be able to afford to pay back what you use.
2. Check your credit: You’re more likely to qualify for a business line of credit with no collateral with a higher credit score. Check your FICO score with credit bureaus and use that info to figure out where you might qualify.
3. Compare lenders: Many lenders are transparent with interest rates, term lengths, eligibility requirements, and fees. You can also typically prequalify to see what rates are available for your business and whether or not you qualify for an unsecured small business line of credit.
4. Apply: When you’ve shopped and compared lenders, it’s time to apply. Most traditional and online lenders offer an online loan application process and can approve funding in a few business days. To get an unsecured line of credit for business, you may need to provide bank statements, tax returns, and identification documents.

The terms you get from a lender depend largely on your personal and business financial profile. Borrowers with a higher credit score are more likely to qualify for an unsecured line of credit. Businesses with higher annual revenues can avoid putting down collateral. Ultimately, the better shape your business is in, the more likely you are to get an business line of credit with no collateral, so it can be wise to add a few good months of earnings to your books before applying.

Best unsecured business lines of credit

Fundible

Fundible is one of the country’s largest alternative lenders, offering unsecured lines of credit worth up to $5 million, with terms of up to ten years. It also offers a variety of other small business loans with no prepayment penalties, and qualification requirements are relatively low. Unlike some other companies, however, Fundible charges origination fees

Eligibility requirements:

• Minimum credit score: 500
• Minimum annual revenue: $96,000
• Minimum time in business: 6 months

Turnaround time:

• 1 business day

Backd

None of Backd’s lines of credit require collateral or a personal guarantee. On the flip side, however, it may have high rates and charges origination fees. You can prequalify before formally applying to see what rates you’re eligible for, and get loan amounts up to $750,000.

Backd has some of the lowest eligibility requirements on this list, with minimum annual revenue of just $100,000, but it also requires weekly repayments.

Eligibility requirements:

• Minimum credit score: 600
• Minimum annual revenue: $300,000
• Minimum time in business: 1 year

Turnaround time:

• 1 business day

Bluevine

Bluevine is a popular alternative lender, and it offers unsecured business lines of credit in Nevada, North Dakota, and South Dakota. Its eligibility requirements are on the high side, with a 625 minimum credit score, two years in business, and $10,000 in monthly revenue, but it offers repayment terms up to one year for loan amounts ranging from $5,000 to $250,000. That’s a solid repayment period for smaller loans.

Eligibility requirements:

• Minimum credit score: 625
• Minimum annual revenue: $120,000
• Minimum time in business: 2 years

Turnaround time:

• 1 business day

Wells Fargo

You likely know Wells Fargo for its banking products, unsecured business credit cards, and other financial solutions. However, it also offers one of the most competitive unsecured business lines of credit. Its revolving line of credit has no scheduled annual review and no prepayment penalties.

On the other hand, Wells Fargo does have some legacy banking particulars, including an annual fee, inactivity fees, and stricter qualification requirements. This makes it a better option for established businesses.

Eligibility requirements:

• Minimum credit score: 680
• Minimum annual revenue: Undisclosed
• Minimum time in business: 2 years

Turnaround time:

• About a week

Bank of America

Like Wells Fargo, Bank of America offers an unsecured business line of credit with lower interest rates, no annual fee, and no draw fees. But, again, you’ll need excellent credentials to qualify without a personal guarantee or collateral. Like most traditional lenders, there’s typically a longer underwriting period, just as there would be with an unsecured business loan.

Eligibility requirements:

• Minimum credit score: 700
• Minimum annual revenue: $100,000
• Minimum time in business: 2 years

Turnaround time:

• 1 day to 1 week

Headway Capital

Headway Capital offers unsecured lines of credit worth up to $100,000 and has less stringest qualification requirements. Businesses with just six months in business may qualify. On the negative side, it’s not available in every state and most borrowers are subject to a 2% draw fee.

Eligibility requirements:

• Minimum credit score: 625
• Minimum annual revenue: $500,000
• Minimum time in business: 6 months

Turnaround time:

• 1 business day

Conclusion

An unsecured business line of credit can be a great way to increase cash flow and working capital to your business. Whether you need to navigate economic downturns, pay for emergency expenses, or invest in growth, a line of credit can help. These top unsecured business line of credit options are a good place to look if you don’t want to be saddled with the monthly payments of a term loan.

FAQs

What is a business line of credit?

A business line of credit is a funding option that gives you access to a maximum funding amount, like a loan, but only charges interest on what you use, like a business credit card. Rather than get a lump sum, one-time payment in your business checking account, you have access to a line of credit to draw on when you need capital. As long as you pay it back, you’ll have access to the entire revolving line of credit.

What’s the difference between a secured and unsecured line of credit?

A secured business line of credit is one that requires collateral, like business assets or personal finances, or a personal guarantee to get. An unsecured line of credit does not require either.

How do you get an unsecured business line of credit?

Qualifying for an unsecured business line of credit can be difficult for new businesses or businesses earning less than $100,000 per year. That said, there are many lenders on the market so spend time shopping around to see minimum requirements and go through the prequalification process.

If your business revenue and personal credit score meet minimum requirements, getting an unsecured business line of credit is much easier.

How can you use a business line of credit?

A line of credit is a cash equivalent, so when you debit the line it goes into your business bank account. From there, you can use it just like cash to pay for any business need, from labor and overhead to marketing expenditures and more.

Who offers the best unsecured business line of credit?

Some of the best loan options for an unsecured business line of credit include Fundible, Bluevine, Wells Fargo, and Bank of America.

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