The line of credit is a flexible solution that provides the necessary liquidity to seize growth opportunities without the constraints of traditional loans.
With the possibility of paying interest only on the amount you used, it’s no wonder these loan types are popular if you run a small business.
But how to choose the right lender for optimal results? That’s where we step in.
From interest rates, repayment terms, and eligibility requirements, we’ve handpicked 5 best lines of credit for a small business to give you a kickstart.
Let’s dive in!
How to Choose The Best Line of Credit for Your Small Business?
When choosing a credit line for your small business, you should consider several factors to ensure it meets your financial needs and supports your growth objectives.
Credit Limit
The credit limit defines the maximum amount you can borrow.
It’s essential to select a limit that sufficiently covers your operational needs without being excessively high, which could lead to higher fees or stricter terms.
Assess your cash flow and future financial projections to determine an appropriate limit.
Interest Rates
Interest rates can vary significantly among lenders, typically ranging from 10% to 99% APR.
Understanding whether the rates are fixed or variable is crucial, as this will affect your overall borrowing costs.
Generally, banks offer more competitive rates than online lenders, but their requirements are more complex and stricter.
Repayment Terms
Check how often you need to repay daily, weekly, or monthly, and choose a schedule that aligns with your cash flow.
Flexible repayment options can ease financial pressure during lean periods.
Fees and Costs
Inquire about any associated fees, such as application, origination, maintenance, or transaction fees.
These fees can significantly impact the overall cost of the credit line, so you should factor them into your decision-making.
Time in Business and Revenue Requirements
Different lenders have varying requirements regarding how long your business has been operating and its revenue levels.
Some may require at least two years in business or specific revenue thresholds before approving a line of credit.
Lender Reputation
Research potential lenders thoroughly.
Look for reviews and testimonials to check their reliability and customer service quality.
It goes without saying that a lender with a solid reputation can provide better support throughout your borrowing experience.
Speed of Funding
How quickly you can access funds after approval is critical, especially for urgent financial needs.
Some lenders may offer faster funding options than others, which can be vital for managing cash flow effectively.
Type of Credit Line
Determine whether you need a secured or unsecured line of credit.
Secured lines generally require collateral but may offer lower interest rates, while unsecured lines do not require collateral but may have stricter eligibility criteria and higher rates.
5 Best Lines of Credit for a Small Business to Explore
Let’s check a quick overview of our top picks.
1. Puls Project — Best for Overall Loan Possibilities
Puls Project is an all-encompassing cash flow and liquidity management tool that spans 3 major categories:
- Loaning Possibilities
- Multibanking, and
- Cash Flow Planning and Forecasting.
Thus, Puls Project provides a holistic approach that attends to every financial aspect of your business.
As such, it provides tools and solutions for smooth and enhanced financial management and oversight of all transactions.
Key Highlights:
1. Loaning Possibilities
💰 Thanks to our fund, Montold SME Lending Fund GmbH & Co. KG, registered with BaFin, we can issue loans with minimal requirements from your side and without banks or third parties involved.
You only need the loan agreement and personal identification of beneficial owners and directors as per GwG.
💰 Furthermore, you can tailor the loan and set the amount and the repayment period to see the total cost and interest rate, as well as monthly interest.
💰 You can get up to €100,000 for 12 months and access the funds within 48 hours of submitting your application.
💰 You can use credit limits as needed without any costs and without them affecting your creditworthiness with banks.
💰 Regarding safety, we rely on Amazon Aurora encrypted DB clusters with AES-256 encryption to secure data on servers hosting the DB clusters.
In addition, we partner with FinAPI, a GDPR-compliant service provider, and we leverage the Transport Layer Security standard to ensure data and information security in transit.
2. Multibanking
Puls's multibanking section provides tools to enhance the management, oversight, and operational efficiency of financial activities.
Thus, you can:
- Link any bank account from over 4,000 bank and view and manage all companies and accounts from a single dashboard.
- Increase your credit limit by connecting more than one bank account.
- Label and categorize your transactions and financial activities for easier expense tracking and spending optimization.
- Analyze profitability by label, category, counterparty, company, or account.
3. Cash Flow Planner
Our Planner tool:
💰 Simplifies financial management,
💰 Improves credit limits through consistent financial planning, and
💰 Ensures the accuracy of business decisions by using reliable data.
Furthermore, it allows you to:
- Track balances and spending across different accounts and companie in a centralized place.
- Rely on accurate, real-time data that we sync multiple times a day. This way, we also recalculate your credit availability each time.
- Enhance your credit limit by helping us understand your business better.
The more you use our solution to manage your cash flow, the more we can raise your credit limit.
- Automate your expense tracking and input your monthly expenses only once so they will be displayed the following month.
- Create future-dated draft payments to immediately see their impact on your cash flow.
- Get instantly notified when we spot a cash gap so you can take necessary actions.
Pros & Cons
Pros:
🟢 An overall financial management and loan solution.
🟢 Minimal loan requirements.
🟢 Access to funds within 48 hours
Cons:
🔴 A lower borrow cap, but with the ability to increase the loan by safely connecting another bank account.
2. Funding Circle — Best for Fixed Interest Rates
Funding Circle is an online lender that offers financing options for working capital, equipment, stock, growth and investment, among other things.
It also provides government-backed loans.
Key Highlights:
✨ You can borrow from £10,000 to £500,000.
✨ Funding Circle uses up-to-date reports from Experian and TransUnion to check your credit score, which should be between 90-100 according to the Experian scoring system.
✨ The minimum amount in business should be at least 1 year.
✨ The minimum annual turnover should be £40,000.
✨ Rates are fixed, starting at annual interest rates as low as 6.9%.
Pros & Cons
Pros:
🟢 No prepayment penalties.
🟢 High maximum loan amounts.
🟢 Rates from 6.9%.
Cons:
🔴 Requires a personal guarantee.
🔴 Charges a loan completion fee.
3. Holm Bank — Best for Traditional Lending Possibilities
Holm Bank is the only bank on our list that provides loaning possibilities for small businesses.
It is based in Estonia and offers 3 loan types for companies: Business loans, Investment loans, and Limit loans.
Key Highlights:
✨ Limit loans start from €25,000.
✨ The repayment period is up to 12 months.
✨ Requires collateral, such as real estate, MES or Kredex surety, surety of people related to the company, or a combination of all of the above.
✨ You must include the company’s financial statements for the last completed financial year and balance sheet and income statement for the last full quarter of the current financial year.
✨ Obligation fee is 3% of the unused limit per year.
Pros & Cons
Pros:
🟢 Flexible use of the loan.
🟢 Fixed-term deposit possibilities.
🟢 Multiple financing options, including leasing.
Cons:
🔴 Requires collateral.
🔴 More complex procedure to get a loan.
🔴 Annual and additional fees apply.
4. Iwoca— Best for Unsecured and Flexi Loans
Iwoca is an online lender focusing on small business loans that include unsecured, short-term and flexi loans.
It offers repayment terms of 12 months usually, without any fees or extra charges.
However, if your loan lasts over 12 months, you’ll have to pay an upfront fee.
Key Highlights:
✨ In order to obtain a loan, you’ll need to be in business for at least 1 year.
✨ You must include bank statements and VAT returns.
✨ The business's minimum turnover should amount to £10,000.
✨ Lines of credit range from £1,000 - £1,000,000.
✨ The interest is charged for the days you have the money.
✨ The rates start at 2% a month for Fleci loans.
Pros & Cons
Pros:
🟢 High credit maximum
🟢 Same-day funding possible.
🟢 No early repayment fees.
Cons:
🔴 Charges the interest for the days you have the money.
🔴 Must be in business for a year.
🔴 Has a variable interest rate.
5. Funding Options — Best for Lender Comparison
Funding Option is an online loan platform that connects you to over 120 possible lenders. Thus, you can compare offers and see what works best for you.
You can apply for business loans, which range from Asset finance, Bridging loans, and Invoice finance to small business loans.
Key Highlights:
✨Loan calculator enables you to get a rough estimate of repayment terms and interest rate, based on the loan amount and the repayment period.
✨ The lender may require a personal guarantee for an unsecured loan.
✨ The loan can start from £1000.
Pros & Cons
Pros:
🟢 High credit maximum
🟢 Access to multiple lenders.
Cons:
🔴 Terms and funding times vary from lender to lender.
🔴 Some lenders require high revenue.
🔴 You may need a personal guarantee.
5 Lines of Credit for a Small Business — Which is The Best?
All the above lenders offer various types of credit to help you not only in lean times but also to seize new opportunities and boost your business growth.
From traditional lenders such as Holm Bank to Funding Circle’s fixed interest rates, each solution can greatly benefit your business.
However, only one solution goes beyond loaning capabilities and provides tools to boost and control your cash flow management and increase your creditworthiness.
Enter, Puls Project.
Why Opt for Puls Project?
Puls Project is an all-in-one cash flow management tool that provides a unified platform to:
💰 Centralize all your financial transactions, balances, accounts and companies.
💰 Quickly access necessary funding to close cash gaps or make new investments.
💰 Plan and forecast your cash flow accurately with real-time synced data and information.
💰 Improve your creditworthiness by automating cash flow management operations to spot and resolve any impediments immediately.
Ready to dive into Puls Project?
Sign up for Puls Project today and get a quick loan while nurturing a healthy cash flow.
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