It can be hard to qualify for a business line of credit with a bank, depending on the bank’s requirements and your business’s qualifications. Online lenders may have more flexible criteria. In general, it’s helpful to have a personal credit score of at least 600, at least six months in business, and a minimum annual revenue of $50,000 when applying for a business line of credit.

A business line of credit may include fees, such as draw fees and account maintenance fees, which can increase the total cost. It’s also likely to have shorter repayment terms than a traditional loan and may not be suitable for large purchases or investments.

It depends on whether you apply for a secured or an unsecured line of credit. A secured line of credit is backed by physical collateral, such as inventory or equipment. If you can’t repay your credit line, your lender can seize your assets to recover their losses. An unsecured credit line doesn’t require physical collateral. But some lenders will still require a personal guarantee or a UCC lien on your business assets. Because secured business lines of credit help reduce risk for the lender, they tend to have lower interest rates and better terms than unsecured options. However, unsecured lines of credit can still be a good option for businesses that need fast access to capital or lack collateral.