Bethany Hickey is the banking editor and personal finance expert at Finder, specializing in banking, lending, insurance, and crypto. Bethany’s expertise in personal finance has garnered recognition from esteemed media outlets, such as Nasdaq, MSN, Yahoo Finance, GOBankingRates, SuperMoney, AOL and Newsweek. Her articles offer practical financial strategies to Americans, empowering them to make decisions that meet their financial goals. Her past work includes articles on generational spending and saving habits, lending, budgeting and managing debt. Before joining Finder, she was a content manager where she wrote hundreds of articles and news pieces on auto financing and credit repair for CarsDirect, Auto Credit Express and The Car Connection, among others. Bethany holds a BA in English from the University of Michigan-Flint, and was poetry editor for the university’s Qua Literary and Fine Arts Magazine. See full bio
Bethany's expertiseAnna Serio was a lead editor at Finder, specializing in consumer and business financing. A trusted lending expert and former certified commercial loan officer, Anna's written and edited more than 1,000 articles on Finder to help Americans strengthen their financial literacy. Her expertise and analysis on personal, student, business and car loans has been featured in publications like Business Insider, CNBC and Nasdaq, and has appeared on NBC and KADN. Anna holds an MA in Middle Eastern studies from the American University of Beirut and a BA in Creative Writing from Macaulay Honors College at Hunter College, CUNY. See full bio
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If you want cash to cover things as needed or back you up during a slow season, then a line of credit (LOC) might be a great fit.
A small business line of credit gives your business access to the on-demand funds it needs to grow or cover cash flow gaps or for everyday expenses. More flexible than a small business loan and usually less expensive than a credit card, these are a great way to make sure you’re prepared to cover whatever unexpected short-term costs come your way.
A business LOC is a type of working capital business loan that works a lot like a business credit card with one key difference: You receive the funds as cash. Business LOCs typically have a credit limit between $1,000 to $250,000, which you can withdraw from as needed. Some banks can even offer business credit lines up to $500k or in the millions.
In some cases, each withdrawal turns into a short-term loan, which you repay plus interest and fees. Or you may be required to make a minimum monthly payment on the balance — similar to the way you pay off a credit card.
Most business credit lines are revolving, meaning the balance replenishes as you pay off your withdrawal. But in a few cases, lenders offer nonrevolving LOCs which can’t be used again after you pay them off.
After applying for a credit line, it may take a few weeks to get funding — usually up to two weeks, though unsecured LOCs typically have faster turnaround times.
Business LOC rates typically range from 8% to 24% APR, according to online business loan marketplace Lendio, which pulls these numbers from its network of over 75 lenders. But some online line of credit providers can charge as much as 80% or more, since there are no rate limits on business financing.
Many business LOCs have variable rates that change with the Prime Rate — such as Prime Rate + 1.99%. Your interest rate may increase or decrease every month or quarter.
The APR on your line of credit may also include fees in addition to interest. Fees common with credit lines include:
If your lender turns each withdrawal into a term loan, you can have anywhere from six months to five years to pay it off in most cases.
Use our calculator to see how much a line of credit would cost your business each month, based on the rates you receive and the terms your provider is offering.