Business Line of Credit: How to Get Approved and Use It Right
A line of credit is the most flexible debt instrument on a business balance sheet — and the easiest to misuse. The underwriting box is narrow, the pricing is product-dependent, and discipline on draws separates operators who renew at 2x from operators who get pulled.
Bank LOC
Prime + 1–4% on drawn balance. Annual renewal, financial covenants, blanket lien. Requires 2+ years tax returns, audited or reviewed financials over $1M, strong DSCR. 4–8 week underwriting.
Non-bank fintech LOC
18–35% APR on drawn balance. Approves on bank statements + soft credit. Funds in 3–7 days, lighter docs, no covenants. Limits $25k–$500k typically.
Asset-based LOC
Borrowing base = 80–90% of eligible AR + 50% of eligible inventory. Pricing 6–14%. Requires monthly borrowing-base certificate. Best for B2B with $2M+ revenue.
How to double your limit
Lenders renew on utilization + repayment behavior. Draw and repay the line at least quarterly for the first 12 months. A line that sits at 0% drawn the entire year gets cut at renewal.
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