A business line of credit can be easier to qualify for than a traditional term loan, especially through online lenders — but requirements still vary significantly by lender type. Here’s exactly what you need to know before applying, so you can target lenders that match your business’s current profile.
1. Time in Business
- Traditional banks: typically require 2+ years in business.
- Online lenders: often accept businesses with as little as 6 months of operating history.
- SBA CAPLines: generally follow similar time-in-business standards as SBA 7(a) loans, usually 2+ years.
2. Revenue Requirements
Lenders want to see consistent revenue capable of supporting repayment:
- Online lenders: often require a minimum of $5,000–$10,000 in monthly revenue.
- Banks: typically look for higher, more established annual revenue, often $100,000+ depending on the requested credit limit.
3. Credit Score
- Traditional banks: generally require a personal FICO score of 680 or higher.
- Online lenders: many accept scores as low as 600–630, though at higher rates.
- Business credit score: a strong Dun & Bradstreet PAYDEX score or Experian Business score can improve your terms, even if the requested credit limit is modest.
4. Required Documentation
- Business bank statements (typically the last 3–6 months)
- Business tax returns (for bank applications; often not required by online lenders)
- EIN and business formation documents
- Personal identification and, in most cases, a personal guarantee
- Debt schedule, listing existing business obligations
5. Collateral (for Secured Lines)
Secured lines of credit may require collateral such as accounts receivable, inventory, or equipment. Unsecured lines skip this requirement but typically come with lower limits and higher rates.
Requirements by Lender Type: Quick Comparison
| Requirement | Traditional Bank | Online Lender | SBA CAPLines |
|---|---|---|---|
| Time in business | 2+ years | 6–12 months | 2+ years |
| Personal credit score | 680+ | 600+ | 650–680+ |
| Monthly revenue | Varies, often higher | $5,000–$10,000+ | Similar to SBA 7(a) |
| Approval speed | 1–3 weeks | 24 hours–3 days | Weeks–months |
| Collateral | Sometimes required | Rarely required | Case by case |
How Lenders Determine Your Credit Limit
Once you meet the baseline requirements, lenders typically set your credit limit based on:
- Average monthly revenue — often a multiple of 1–2 months of revenue for online lenders
- Existing debt obligations, factored into your Debt Service Coverage Ratio (DSCR)
- Credit score and payment history
- Time in business — longer track records often unlock higher limits over time
What If You Don’t Meet the Requirements Yet?
- Consider an online lender first, since many have significantly more flexible time-in-business and credit score thresholds than traditional banks.
- Build your business credit profile by registering with Dun & Bradstreet and ensuring vendors report payment history.
- Start with a business credit card, which often has more accessible qualification criteria, and use it to establish a track record before applying for a larger line of credit.
- Improve your DSCR by paying down existing debt before applying, since a lender’s calculated limit is directly tied to your capacity to take on additional revolving credit.
Frequently Asked Questions
What credit score do I need for a business line of credit? Banks generally require 680+, while many online lenders will approve applicants with scores as low as 600, typically at a higher rate.
Can a business with no revenue history get a line of credit? It’s difficult with most lenders, though some online providers evaluate business bank account balances and cash flow patterns rather than requiring extensive revenue history — see our guide on [business lines of credit for startups with no credit history].
Do I need collateral to get a business line of credit? Not always — many online lenders offer unsecured lines, though typically with lower limits and higher rates than secured options, and a personal guarantee is still commonly required.
Conclusion
Meeting a lender’s requirements for a business line of credit comes down to demonstrating consistent revenue, a reasonable credit profile, and manageable existing debt. If you don’t yet meet a bank’s stricter criteria, online lenders offer a realistic path to qualifying sooner, often with faster approval as well. For a full breakdown of how these credit lines actually work once approved, revisit our guide on [what is a business line of credit and how does it work].