A business line of credit is one of the best financial tools that small and medium-sized businesses can use right now. A line of credit (LOC) can make a big difference in whether your business grows or struggles. You can use it to manage cash flow, cover emergencies, buy inventory, or just give your business a stronger financial base.
This complete guide tells you everything you need to know about business lines of credit, including how they work, how to qualify, what lenders look for, how rates are set, and most importantly, how ICG Funding can help you get approved even if a bank has already turned you down.
When you finish reading this guide, you will know exactly:
- What a line of credit for a business is
- How it works, step by step
- The various kinds of LOCs
- The minimum and suggested qualifications needed
- How lenders look at your business
- Rates of interest, fees, and how to pay back loans
- What makes banks different from online lenders
- How to use your LOC the right way
- How to get ICG Funding to approve you
Let’s get started.
What Is a Line of Credit for a Business?
A business line of credit (BLOC) is a type of credit that lets your business borrow money whenever it needs it, up to a certain limit. You only have to pay interest on the money you borrow, not the whole credit line.
To put it simply:
A line of credit is like a business credit card, but it gives you cash, higher limits, and better rates.
You can do the following with a business line of credit:
- Take money out whenever
- Use the money for any business purpose
- Pay back at your own pace
- Draw again as soon as the money is paid back
This flexibility makes a LOC the best tool for managing working capital.
Why a Business Line of Credit Is Necessary
Every business has to deal with:
- Slowdowns in the seasons
- Costs that come up out of nowhere
- Lack of inventory
- Payments that are late
- Gaps in cash flow
- Opportunities for growth that need quick cash
With a business line of credit, you can get money right away when you need it, without having to apply for a loan every time.
This is why even businesses with good cash flow keep a line of credit open: you don’t open one because you have problems; you open one so problems never get worse.
How to Use a Business Line of Credit (Step by Step)
Here’s the easiest way to explain how a LOC works:
- You have a set limit that you can use.
Example: $30,000 credit line. - You take money out when you need it.
Let’s say you spend $10,000. - You only pay interest on the $10,000 you borrowed.
Not the whole $30,000. - You pay back the draw over time.
Weekly, biweekly, or monthly, depending on how the lender is set up. - Your credit line gets full again.
Once you pay back the $10,000, the full $30,000 becomes available again.
This revolving structure is why business owners prefer LOCs over traditional loans.
Different Kinds of Business Lines of Credit
Business LOCs fall into two main groups:
1. Secured Business Line of Credit
A secured line needs collateral such as:
- Stock
- Tools
- Accounts receivable
- Property
- Business assets
Advantages:
- Lower interest
- More likely to get approved
- Higher credit limits
Disadvantages:
- Longer underwriting time
- Requires more paperwork
- More scrutiny from banks
2. Unsecured Business Line of Credit
No collateral needed. Lenders decide based on:
- Revenue
- Credit score
- Stable cash flow
- Bank activity
Pros:
- Fast approvals
- Less paperwork
- Easier qualification
Cons:
- Slightly higher interest rates
- Lower limits for newer businesses
What Kind of Help Does ICG Funding Offer?
ICG Funding works with lenders that provide:
- Unsecured LOCs (most common)
- Secured LOCs (for higher limits)
- Hybrid lines
- Stated income lines
- LOCs with no or low documentation
This helps business owners get approved even if a bank normally rejects them.
Rates and Fees for Business Lines of Credit
Interest rates vary depending on the lender.
Typical APR ranges:
- U.S. banks: 8–13%
- Regional banks: 10–16%
- Online lenders: 12–25%
- Fintech LOCs: 15–35%
Banks offer lower rates but are hard to qualify for. Online lenders approve more businesses but at higher rates because of higher risk.
Common Fees
Some lenders don’t charge fees, but common ones include:
- Draw fee: 1–3% of amount drawn
- Annual fee: $100–$350
- Monthly maintenance fee
- Renewal fee
ICG Funding helps you lower fees by comparing offers from multiple lenders.
What You Need to Get a Business Line of Credit
Minimum requirements typically include:
Minimum Requirements
- 6 months in business
- $8,000–$12,000 monthly revenue
- 600–630+ credit score
- 3–6 months of bank statements
- No major overdrafts
Strong Approval Profile
- 2+ years in business
- 500–720+ credit score
- $20,000–$100,000 monthly revenue
- Clean financials
- Good business credit
- Solid daily bank balance
How Lenders Look at Your Business
Most owners think approval is all about credit score. It’s not.
Lenders focus on:
1. Trends in Daily Bank Balances
They check:
- Ending daily balances
- NSF occurrences
- Overdraft history
- Deposit frequency
Healthy statements = higher approval odds.
2. Revenue Stability
Consistency matters more than size.
Stable $20K/month revenue is better than inconsistent $50K/month revenue.
3. Debt Payments
Stacked loans or MCA debt can lower your credit limit.
However, ICG Funding works with lenders that specialize in LOCs designed for consolidation, helping businesses get approved even when restructuring.
4. Credit Score
Your score matters for:
- Interest rate
- Credit limit
- Unsecured approval
But fintech lenders care more about cash flow and revenue than credit score alone.
Business Line of Credit vs. Business Loan
Here’s the difference:
Business Loan
- Lump sum
- Fixed payments
- Interest on the full amount
- Good for long-term purchases
Business Line of Credit
- Draw anytime
- Interest only on what you use
- Revolving credit
- Ideal for working capital
How to Use a Business Line of Credit Smartly
Successful businesses use LOCs strategically.
Best Uses:
- Buying inventory
- Emergency expenses
- Marketing campaigns
- Payroll
- Hiring
- Repairs
- Covering short-term cash flow problems
Avoid Using LOC For:
- Long-term debt
- Personal expenses
- Vehicles/equipment
- Paying off high-risk MCA debt without a plan
Bank LOCs vs Online LOCs
Bank LOC Advantages
- Lowest rates
- Highly respected
- Great for large companies
Bank LOC Disadvantages
- Slow approval (weeks–months)
- Heavy documentation
- Strict credit requirements
- 60–80% denial rates
Online Lender LOC Advantages (ICG Funding’s Network)
- Approvals in 24–72 hours
- Flexible underwriting
- Less paperwork
- Higher approval rates
- Ideal for revenue-driven businesses
Online Lender Disadvantages
- Slightly higher rates
- Lower limits for new businesses
How to Raise Your LOC Limit
To increase your credit limit:
- Keep daily balances high
- Reduce overdrafts and NSFs
- Keep credit utilization under 50%
- Stabilize revenue
- Use your LOC responsibly
- Apply through a broker like ICG Funding
How ICG Funding Helps You Get a Business Line of Credit
Banks reject most small businesses. That’s where ICG Funding comes in.
ICG Funding helps you:
- Access lenders banks don’t work with
- Get approved even with lower credit
- Secure higher limits
- Shop for better rates
- Avoid predatory lenders
- Improve approval odds
- Get funded fast (24–48 hours)
ICG Funding’s network includes:
- U.S. lenders
- Fintech lenders
- Private lenders
- Asset-based lenders
- Revenue-based LOC providers
This means your business can access any LOC type on the market, not just one.
How to Get a Business Line of Credit from ICG Funding
Step 1: Submit your application
Step 2: Submit bank statements
Step 3: Get multiple offers
Step 4: Pick the best one
Step 5: Get funded in 24 hours
In Conclusion
A business line of credit is the most important financial tool for long-term stability. It prevents cash flow issues, supports growth, and opens the door to future financing opportunities.
