What is a business line of credit and how does it work?
A business line of credit is a revolving loan that allows access to a fixed amount of capital, which can be used when needed to meet short-term business needs. A business line of credit is the best financing option when you need extra working capital to cover recurring business expenses or bridge cash flow gaps. With ongoing access to funds, you have the flexibility to withdraw only what you need, when you need it—and pay for only what you use. So, you’ll be prepared for whatever challenges and opportunities come your way.
Benefits of an OnDeck Business Line of Credit
Revolving lines of credit from
12-month repayment term, resets after each withdrawal
Minimum eligibility requirements for an OnDeck Term Loan or Line of Credit*
How other small business owners have used their
OnDeck Lines of Credit
FAQs: OnDeck Business Line of Credit
What is Instant Funding*?
Instant Funding is the fastest and easiest way for small business owners to access working capital to run their business. OnDeck is one of the only lenders to offer business lines of credit with instant access to your funds. Draw from your line of credit when you need it and see the funds in your account in seconds, 24/7 even when the banks are closed – so you can get back to business as fast as you can click “draw funds.” And the best part is Instant Funding is available at no extra cost.*
How does my line of credit payback work?
Unlike other online lenders – our line of credit is revolving with no draw fees (just a monthly maintenance fee). Funds replenish as you pay them back – and additional draws are consolidated into one loan with one easy weekly payment.
Can I get a credit line increase?
There are some times when you could really use access to additional funds. Based on your cash flow, net income and payback history you may be eligible for a credit line increase. All you need to do is call your dedicated loan advisor to learn more.
What other small business loans can I get in addition to my line of credit?
You may have a project that could benefit from funds beyond the capabilities of your business line of credit. At OnDeck we understand and our term loans are available in addition to your business line of credit. Reach out to your dedicated loan advisor to explore some of your available options. In addition to OnDeck’s Term Loan and Line of Credit, check out this page for other types of small business loans.
What is the SMART Box®?
Transparency is key when it comes to choosing a lender. That’s why OnDeck developed the SMART Box Capital Comparison Tool. In plain English and an easy-to-read format, this tool shows you key terms you need to evaluate potential short term loan offers so that you have a comprehensive, standardized breakdown of your cost of capital. The SMART Box is used by all members of the Innovative Lending Platform Association.
How does business credit building work?
Unlike most online lenders, we use soft pulls of personal credit reports (which doesn’t affect your credit score).* And we report your payments to business credit bureaus so that every time you pay on time, you’re helping your business build a strong credit profile.
Additional resources on business lines of credit
Business Line of Credit vs. Business Credit Card
A line of credit is a revolving loan that provides a fixed amount of working capital that can be accessed as needed. All or part of the credit line can be accessed at any given time up to the fixed limit, repaid, and used again. Interest is only paid on the amount of credit used. A business credit card is also a very popular and flexible financing and purchasing tool for those times when business owners need quick access to cash.
While business credit cards are similar to business lines of credit and are both used by small business owners on a regular basis, there are some purchases or payments that can’t be made with a business credit card. For example, you may not be able to make certain payments including your property lease, payroll, and invoices from vendors; but you can use the funds from your business line of credit. Additionally, while some business credit cards come with lower credit limits, an OnDeck business line of credit is between $6,000 and $100,000.
Secured vs. Unsecured Business Lines of Credit
There are different types of loans for different types of business needs. One type of lending common for small business is asset-based lending. Asset-based lending can be any lending product that uses an asset as collateral for the loan, or in this case, a line of credit. In the event the borrower defaults on the loan, the lender can take possession of the asset. Assets can include things like real estate, equipment, inventory, accounts receivable, or cash accounts. These assets can be pledged as collateral to back new loans, and whether they are used as collateral determines whether the loan or line of credit is “secured” or “unsecured”.
A secured business line of credit requires a business to pledge assets as collateral to secure the line. Since a line of credit is a short-term liability, lenders typically ask for short-term assets, such as accounts receivable or inventory. If the borrower is unable to repay the line, the lender may proceed to assume possession of the collateral and sell the asset in order to pay off the balance.
An unsecured business line of credit does not require a business to pledge assets as collateral to secure the line. Unsecured lines of credit typically require the business owner to have a strong credit profile and credit score, along with a positive business track record to qualify. In general, unsecured lines of credit have slightly higher interest rates and line sizes are relatively smaller.
What You Need to Know About a Business Line of Credit
Does a Business Line of Credit Make Sense for My Business
How Does a Line of Credit Work?
Should I Apply for a Business Line of Credit, Business Credit Card, or a Business Loan?
*There are some industries we cannot serve (see list of restricted industries), as well as some industries and states impacted by the Coronavirus to which we are temporarily not lending. In addition, OnDeck does not lend to businesses in Nevada, North Dakota or South Dakota. OnDeck is no longer accepting new Paycheck Protection Program (PPP) loan applications. Registration terms and conditions apply. Instant Funding registration and withdrawals are currently supported from your desktop and the OnDeck mobile website. They are not currently supported in the OnDeck mobile app. Occasionally, transfer may take up to 30 minutes to complete due to potential Visa & bank processing lags. This benefit is available at no additional cost with a vast majority of major banks participating. Instant Funding is available for transactions between $1K-$10K. We always do a soft inquiry unless your credit file is restricted, in which case we would contact you to lift the restriction which may result in a hard-pull.