Line of Credit vs. Startup Funding: Compare Business Funding
Business line of credit vs. startup funding — when new businesses can access revolving credit vs. when startup programs are the right path.
Business Line of Credit: A revolving business line of credit lets you draw funds as needed up to a set limit and only pay interest on what you use. Startup Business Funding: Startup funding covers the earliest-stage capital needs — equipment, SBA microloans, and founder-backed lines of credit — for businesses with limited or no operating history.
Business Line of Credit vs. Startup Business Funding — side by side
| Business Line of Credit | Startup Business Funding | |
|---|---|---|
| Typical amount | $10,000 – $500,000 | $5,000 – $500,000 |
| Typical term | Revolving (12 – 24 month draw period) | 6 months – 10 years |
| Rate | 8% – 36% APR | 8% – 30% APR |
| Minimum time in business | 6 months | 0 – 12 months |
| Minimum credit score | 580+ | 600+ (personal credit weighted) |
Which is right for your business?
- Business Line of Credit tends to fit best when you need ongoing cash flow or seasonal inventory.
- Startup Business Funding tends to fit best when you need initial equipment or inventory & supplies.
Frequently asked questions
Can a startup get a business line of credit?
Some alternative lenders issue small lines ($10K–$50K) to startups with 620+ personal FICO and some revenue history. Bank-issued credit lines typically require 2+ years of business history. Most startups use other products first and graduate to credit lines as they establish revenue.
