When you're shopping for a business loan or credit card, you'll encounter one crucial number that can make or break your financial decision: the Annual Percentage Rate, or APR. Understanding this figure could save you thousands of dollars over the life of your loan.
APR represents the true annual cost of borrowing money. While many people confuse it with the interest rate, APR is actually much more comprehensive. Think of it this way: the interest rate is just one ingredient in a recipe, while APR is the complete dish.
The interest rate shows what percentage the lender charges on your loan principal—the actual money you borrowed. But APR includes that interest rate plus all the additional fees wrapped into your loan: origination fees, underwriting costs, document preparation charges, and more.
Focusing solely on interest rates is like buying a car based only on its sticker price, ignoring insurance, maintenance, and fuel costs. You need the full picture to make an informed decision.
At first glance, Loan B looks better with its lower interest rate. But the APR tells the real story. Loan A actually costs less overall because it has fewer fees baked in. You'll pay 9% annually on the principal versus 10%, translating to real savings over time.
A lower APR means lower monthly payments and less financial strain on your business. A higher APR means you're paying more to borrow the same amount of money, which increases the risk of missed payments and potential credit score damage.
To see how APR impacts your monthly budget, use this simple formula:
((APR ÷ 100) × Principal) ÷ 12
For example, with a 14% APR on a $5,000 loan:
((14 ÷ 100) × 5,000) ÷ 12 = $58.33 per month
This monthly APR cost comes in addition to your principal repayment. While this calculation uses simple interest and provides an estimate, it helps you budget appropriately for your loan payments.
Different loans include different fees in their APR calculation. Common ones include:
Underwriting fees cover the research to determine your loan eligibility, including verification of financial statements, bank records, and credit reports.
Document preparation fees pay for the paperwork involved in processing your loan.
Origination fees encompass the general costs of approving and processing your application.
Closing costs cover final expenses like property valuations for real estate loans or processing costs for auto loans.
Some loans also charge non-refundable application fees upfront, which you'll lose even if your loan is denied.
APRs come in two flavors, and choosing the wrong one could cost you.
Fixed APR stays constant throughout your loan term. The lender sets a percentage, and that's what you pay every month, predictably and reliably.
Variable APR fluctuates based on an index, typically the prime rate. The prime rate represents the minimum interest banks charge on loans, usually about 3% above the federal funds rate. The Federal Reserve's Open Market Committee reviews and potentially adjusts this rate every six weeks.
While variable rates rarely change dramatically in the short term, incremental shifts over years can significantly impact what you pay. A loan that starts at a reasonable rate could become expensive by the time you're finishing your repayment.
The Truth in Lending Act, passed in 1969, protects borrowers from deceptive lending practices. This law requires lenders to clearly disclose loan costs so you can comparison shop effectively. It also regulates how lenders calculate and disclose fees, preventing hidden charges and faulty calculation methods.
Credit cards often have multiple APRs for different types of transactions. Your purchase APR might differ from your cash advance APR or balance transfer APR. Some cards offer 0% introductory APR periods, essentially letting you borrow for free if you pay off the balance before the promotional period ends. However, miss a payment or exceed your limit, and you could face penalty APRs on outstanding balances.
APR is more than just a number—it's your roadmap to understanding the true cost of borrowing. Before signing any loan agreement or credit card application, compare APRs across different offers. Look beyond promotional rates and low interest percentages to see the complete picture.
Remember: a loan with a slightly higher interest rate but lower overall APR will save you money in the long run. Take the time to calculate, compare, and choose wisely. Your business's financial health depends on it.
If you keep immaculate books in Beancount, you already think in systems. You appreciate precision, automation, and a single source of truth. This guide turns that disciplined mindset into an 11-step, practical workflow for establishing and growing business credit. We'll map each critical step to simple, automatable Beancount habits, transforming your ledger from a historical record into a forward-looking tool for financial strength.
The world of business credit can feel opaque, but the principles for 2025 are straightforward. Here’s what you need to know before you start.
First, separate your identities. The absolute foundation of business credit is a distinct legal entity (like an LLC or corporation) with its own, separate bank accounts. Co-mingling personal and business funds is the fastest way to be denied business credit.
Next, get an Employer Identification Number (EIN). This is your business's social security number for tax purposes. It is always free and you should apply for it directly with the IRS—never pay a third-party site for this service.
Then, understand how you’ll be scored. Unlike consumer credit's unified FICO score, business credit is measured by several bureaus, each with its own methodology:
Dun & Bradstreet PAYDEX® (1–100): This score is almost entirely driven by your payment history with vendors and suppliers. A score of 80 is considered on-time, while anything higher indicates you pay your bills early.
Experian Intelliscore Plus (1–100): This is a predictive score that forecasts the likelihood of serious delinquency. It analyzes payment trends, public records, and other company data.
FICO® SBSS (Small Business Scoring Service): This score is critical for accessing SBA 7(a) "Small Loans." As of 2025, the Small Business Administration (SBA) lists a minimum prescreen score of 165.
Finally, know that monitoring is fragmented. Scores differ by bureau, and accessing your full reports often costs money. Before paying for a report, try to verify which score a specific lender or vendor uses.
Heads-up: A quick note on identifiers. If you plan to sell to the U.S. federal government, the Unique Entity ID (UEI) replaced the D-U-N-S number in the SAM.gov system on April 4, 2022. However, for building your business credit file with Dun & Bradstreet, the D-U-N-S number is still essential.
The 11 Steps (and the Beancount Moves That Make Them Stick)
This is the non-negotiable first step. Form a legal entity, open a dedicated business checking account, and keep personal funds out. This creates a clean financial history that credit bureaus can track.
Beancount Move:
Your ledger should explicitly reflect this separation from day one. Open distinct accounts for the business and document initial capitalization cleanly.
Apply directly at IRS.gov. Once you receive your EIN confirmation letter (SS-4), store a digital copy in a docs/ directory alongside your ledger. This keeps critical identity documents version-controlled and accessible.
Beancount Move:
Use metadata at the top of your ledger file to record the EIN and link to the source document.
Tip: Beware of search-ad "EIN helpers" that charge fees or harvest your data. Always verify you are on a .gov domain before entering sensitive information.
A D-U-N-S number links your company to its Dun & Bradstreet credit file, which vendors and lenders use to assess your reliability. Go to the D&B website to claim or update your company's record for free.
Beancount Move:
Just like your EIN, add your D-U-N-S number to your ledger's metadata. You can also link to an internal checklist for vendor onboarding to ensure you're always providing consistent information.
4. Open a Business Credit Card and Use It Prudently
A revolving business credit card is a powerful tool, as issuers often report your payment history to business bureaus. Use it for regular expenses, keep your utilization modest (ideally under 30%), and never, ever miss a payment.
Beancount Move:
Model your credit card as a liability. Use metadata to note which bureaus it reports to. Track purchases and, crucially, payments from your business checking account.
5. Establish Vendor Net-30 Trade Lines That Report
This is the fastest path to building a strong PAYDEX score. Find vendors that offer payment terms (e.g., Net-30) and confirm that they report your payment history to bureaus like D&B. Office supply, packaging, and shipping companies are common starting points.
Beancount Move:
Track each vendor invoice in your Accounts Payable (Liabilities:AP). When you pay the invoice, record the transaction and consider adding a tag to track your payment habits.
D&B explicitly maps a PAYDEX score of 80 to "prompt/on-time" payments. Scores above 80 signify early payments. If your cash flow allows, paying invoices 10–20 days before the due date can significantly boost your score.
Beancount Move:
This is a process, not a transaction. Set up a recurring reminder (e.g., a cron job or a Makefile task) that queries your open Liabilities:AP accounts and flags invoices that are due in the next 30 days, prompting you to schedule payments early.
Use the exact same legal name, address, phone number, and industry codes (like NAICS) across your bank accounts, IRS filings, insurance policies, and credit bureau profiles. Inconsistencies can lead to fragmented credit files or mismatches.
Beancount Move:
Establish a single source of truth for this data in your ledger's top-level metadata.
8. Monitor Your Business Credit and Dispute Errors
Business credit reports are less standardized and regulated than consumer reports, making errors more common. Periodically pull your reports from the major bureaus and dispute any inaccuracies immediately.
Beancount Move:
Maintain a directory for docs/credit/ where you store PDFs of your credit reports and any dispute correspondence. You can link to these documents directly from transactions that were misreported, creating an auditable trail.
9. Graduate to Bank Lines and SBA Options (When Ready)
Once you have a solid history of on-time payments, you can approach banks for lines of credit or apply for SBA-backed loans. For SBA 7(a) Small Loans, lenders use the FICO SBSS score, and the current minimum prescreen is 165. Keep your personal credit clean as well, as it's often a factor.
Beancount Move:
Use your ledger to track key financial metrics that lenders care about, like your Debt Service Coverage Ratio (DSCR) or cash buffer days. You can define these as custom metadata and run queries against your ledger to see if you meet a lender's covenants before you even apply.
Good credit is the result of consistent habits. Set up autopay for at least the minimum payment on business credit cards. Schedule a weekly time block to run your A/P. Regularly review A/R aging to protect your cash flow. Systematize the behaviors that lead to good scores.
Beancount Move:
Document your financial policies as metadata. This serves as a reminder and a checklist for your operations.
How many trade lines do I need to generate a D&B score?
Dun & Bradstreet requires a sufficient number of verified trade experiences to generate a PAYDEX score. While there's no magic number, the key is having multiple vendors consistently reporting your on-time or early payments.
Where do I check my business credit scores?
Each bureau (D&B, Experian, Equifax) offers paid access to reports on their websites. Some third-party services aggregate data, but they may not show the specific score a lender uses. Before paying, ask your potential lender or vendor which credit bureau and score they rely on.
I see sites charging money for an EIN. Are those legit?
No. An EIN is always free from the official IRS.gov website. Avoid non-.gov domains and sponsored search ads that pose as official IRS pages; they are designed to charge you for a free service or collect your data.
A business line of credit (LOC) is one of the most flexible financing tools available, but its mechanics can be tricky. It lets you borrow up to a set limit, repay, and borrow again, paying interest only on what you use. It's ideal for smoothing cash flow, bridging accounts receivable gaps, and handling other short-term needs.
However, navigating secured vs. unsecured lines, variable rates, hidden fees, and tax implications is crucial. This guide breaks down everything owners and bookkeepers need to know, complete with practical examples for tracking it all in Beancount.
Think of a business line of credit as revolving working capital. It’s a preset credit limit you can draw from whenever you need funds. Once you repay the borrowed amount, your available credit is restored, ready to be used again. The simplest analogy is: “credit card mechanics, business-loan pricing.”
This makes it fundamentally different from a term loan. A term loan provides a lump sum of cash upfront, which you repay over a fixed period through regular installments. LOCs are built for flexibility and short-term cash cycle management, whereas term loans are better suited for large, long-term investments like purchasing equipment or real estate.
A line of credit shines in specific, recurring business scenarios:
Bridging Receivables and Inventory Cycles: This is the classic use case. You can draw from your LOC to pay suppliers for inventory and then repay the line weeks or months later when your customers pay their invoices. It’s a perfect tool for wholesalers, agencies, and seasonal businesses that face predictable cash flow gaps.
Emergency Buffer: Unexpected expenses are inevitable. An LOC acts as a ready-to-draw backstop for covering a payroll shortfall, funding an emergency repair, or managing a sudden operational need. It’s far more efficient than applying for a new loan every time a surprise occurs.
Opportunistic Buying: Did a key supplier offer a significant discount for early payment? You can use your LOC to seize the opportunity, capture the savings, and repay the draw once your own cash flow catches up.
Lenders need assurance they’ll be repaid, which is why most lines of credit are secured by collateral.
Secured Lines: Many bank LOCs are secured by specific assets, like your accounts receivable or inventory. More commonly, a lender will place a blanket UCC lien on the business. This gives the lender a claim on most of your business assets in the event of a default. It is critical to read the security agreement and confirm if any key assets (like intellectual property) are excluded assets.
Unsecured Lines: These are harder to qualify for, typically come with lower limits and higher interest rates, and are reserved for businesses with stellar credit. They don't require you to pledge specific collateral, but many lenders will still require a personal guarantee from the owner.
SBA Options: For U.S. borrowers, the Small Business Administration (SBA) offers programs like the 7(a) Working Capital Pilot (WCP) for monitored lines of credit and CAPLines, which are asset-based revolvers tied directly to short-term working capital needs.
Practical Tip: Always ask the lender to spell out any carve-outs in the lien agreement. "Excluded assets" clauses are negotiable and can prevent a blanket lien from interfering with other financing, like an equipment loan.
The cost of an LOC isn't just the interest rate. You must account for a variety of potential fees.
Interest: You are only charged interest on the drawn amount. Rates are typically variable, calculated as a benchmark rate (like the Prime Rate) plus a margin (e.g., Prime + 1.5%). As you repay the principal, your interest cost decreases and your credit availability is restored.
Fees to Watch For:
Origination Fee: A one-time fee charged when you open the line.
Annual or Monthly Maintenance Fee: A recurring charge to keep the line open, sometimes called a non-usage fee if you don't draw from it.
Draw Fee: A fee charged each time you take funds from the line.
These costs add up. Before committing, model your expected usage to find the true cost.
Lenders evaluate your business's health based on revenue consistency, time in business, and both business and personal credit scores. Building a strong history of on-time payments is the best way to gain access to better terms and lower rates.
Most LOCs aren't "set it and forget it." They often require annual renewal, where the lender reviews updated financial statements. Your agreement may also include financial covenants, such as maintaining a minimum Debt Service Coverage Ratio (DSCR) or interest coverage ratio. If your financial metrics slip, the lender has the right to reduce your limit or freeze the line entirely.
Interest paid on a business line of credit is generally a deductible business expense. However, under Section 163(j) of the tax code, this deduction may be capped.
A small-business exception exists for companies whose average annual gross receipts for the prior three years fall below an inflation-adjusted threshold (around $30 million for 2024 and $31 million for 2025). Always confirm the specifics with your tax advisor, as these rules are complex.
Tracking an LOC in a plain-text ledger like Beancount ensures clarity and accuracy. Below are illustrative examples of the key transactions. (Note: In Beancount, increasing a liability uses a negative amount, while repaying it uses a positive amount).
A well-structured line of credit is an invaluable tool for managing a growing business. The key is to fully understand the collateral you're pledging, the total cost including all fees, and the obligations required to keep the line in good standing.
By keeping a clean ledger in Beancount with clear metadata, you can track your usage, understand its true cost, and ensure this flexible tool remains a powerful asset for your business.
This article is for educational purposes and does not constitute financial, legal, or tax advice. Consult with a qualified professional for guidance specific to your situation.
If you run a small business, the right credit card can be a quiet profit center. It can smooth your cash flow, earn outsized rewards on your real expenses, and bundle in protections you’d otherwise pay for. Below is a practical, category-aware shortlist of 16 excellent business cards for 2025. They are grouped by what they do best, with their key earning structures highlighted. Offers and terms change, so always verify details with the issuer before you apply.
For simple, everyday cash back: The Chase Ink Business Unlimited® offers a flat 1.5% cash back on every purchase with a $0 annual fee and a 0% introductory APR on purchases for 12 months.
For big spenders wanting high cash back without juggling categories: The Chase Ink Business Premier® is a pay-in-full card that earns 2.5% on purchases of $5,000 or more and 2% on everything else, with a $195 annual fee.
For office, internet, and phone bills: The Chase Ink Business Cash® gives 5% cash back at office supply stores and on internet, cable, and phone services (up to a cap), plus 2% at gas stations and restaurants. It has a $0 annual fee and an introductory APR offer.
For low-maintenance points on everything:The Blue Business® Plus Credit Card from American Express provides 2X Membership Rewards® points on the first $50,000 in purchases each year (then 1X) for a $0 annual fee.
For a cash-back twin to the Blue Business Plus: The American Express Blue Business Cash™ Card earns 2% cash back on the first $50,000 spent annually (then 1%), with a $0 annual fee.
For ad spend, shipping, and travel: The American Express® Business Gold Card automatically gives you 4X points on your top two eligible spending categories each billing cycle, up to $150,000 per year.
For travel power perks and lounge access:The Business Platinum Card® from American Express is the go-to for premium travel benefits, offering 5X points on flights and prepaid hotels booked through AmexTravel, though it comes with a high annual fee.
For a no-annual-fee, pick-your-category card: The Bank of America® Business Advantage Customized Cash Rewards card lets you earn 3% in a category of your choice and 2% on dining for a $0 annual fee. The Preferred Rewards for Business program can boost earnings by 25%–75%.
For restaurants, gas/EV charging, and office supplies: The U.S. Bank Triple Cash Rewards Visa® Business Card earns 3% in these key categories, has a $0 annual fee, includes a $100 annual software subscription credit, and offers a 0% introductory APR window.
For simple, travel-centric points: The Capital One Spark Miles for Business card earns 2X miles on everything and includes a Global Entry/TSA PreCheck credit. The $95 annual fee is waived for the first year.
For unlimited 2% cash back: The Capital One Spark Cash Plus is a pay-in-full charge card with unlimited 2% cash back. Its $150 annual fee is refunded if you spend $150,000 annually.
For loyal American Airlines travelers: The CitiBusiness® / AAdvantage® Platinum Select® Mastercard® offers a first checked bag free and preferred boarding on AA flights. The $99 annual fee is often waived for the first year.
For warehouse club runs and fuel: The Costco Anywhere Visa® Business Card by Citi gives 4% back at gas stations/EV chargers (up to a cap), 3% on dining and eligible travel, and 2% at Costco. There's no card annual fee with a paid Costco membership.
For Amazon-first businesses: The Amazon Business Prime American Express Card delivers 5% back at Amazon.com with an eligible Prime membership (or you can choose flexible payment terms), all for a $0 annual fee.
For general travel points with a rich hotel ecosystem: The Marriott Bonvoy Business® American Express® Card earns 6X points at participating Marriott properties, provides Gold elite status, and includes an annual free-night certificate for a $125 annual fee.
For ads, shipping, and travel spending: The Chase Ink Business Preferred® is a category workhorse, earning 3X points on shipping, online ads, travel, and internet/cable/phone services on the first $150,000 spent per year.
To get more value than you pay in an annual fee, focus on these key areas.
Match rewards to your top expense lines.
Look at your ledger. If you spend heavily on office supplies, internet, and phone bills, the Ink Business Cash® is unusually efficient. If your spending is concentrated in a few shifting categories like ads, shipping, or travel, the American Express® Business Gold Card automatically targets your top two categories each cycle without any manual switching.
If you prefer simplicity, go for a flat-rate card.
Options like the Ink Business Unlimited® (1.5% cash back) and the Blue Business® Plus (2X points up to $50K) minimize the mental load without sacrificing value.
Fund growth with introductory APR windows.
Several cards offer 0% introductory APR on purchases, which can help smooth out inventory or equipment buys if you pay them down on schedule. Look to the Ink Cash, Ink Unlimited, and U.S. Bank Triple Cash for these offers.
If you travel often, decide between perks and earning power.The Business Platinum Card® from American Express layers on lounges and statement credits, while the Capital One Spark Miles for Business keeps it simple with 2X miles everywhere and the option to transfer to airline and hotel partners.
Leverage existing banking relationships.
If you already bank with Bank of America, their Preferred Rewards for Business status can boost earnings by 25%–75% on eligible BofA business cards, turning decent earn rates into standout ones.
For large, lumpy purchases, do the math.
The Ink Business Premier® pays 2.5% on single transactions of $5,000 or more. If you regularly cut big checks for freight, equipment, or media buys, that math wins fast. Just remember it’s a pay-in-full card.
One-Card Simplicity: The Blue Business® Plus (2X up to $50K) or Ink Unlimited® (1.5% back) covers miscellaneous spending with minimal effort.
Two-Card Combo: Pair the Ink Business Cash® (for its 5%/2% categories) with the Ink Business Unlimited® (for 1.5% everywhere else). If you prefer not to have two Chase cards, swap in the Blue Business® Plus for the "everywhere" role.
Travel Optimizer: Use a high-multiplier card like the American Express® Business Gold Card (4X on top categories) or Ink Business Preferred® (3X on its categories) and a flat-rate travel card like the Spark Miles for Business for everything else, then redeem your points for trips.
Intro APR is not free money. Treat 0% periods as structured payment plans and pay off the balance before the introductory window closes. Cards like the Ink Cash, Ink Unlimited, and U.S. Bank Triple Cash all offer these periods.
Pay-in-full products behave differently. The Ink Business Premier® and Spark Cash Plus are designed to be paid in full monthly. This is great for spenders with predictable cash flow but not for those who need to revolve a balance.
Co-branded cards have constraints. Airline and hotel cards can be incredible—if you actually use the brand. Otherwise, general-purpose cash-back or transferable-points cards are usually a better first choice.
This list prioritizes (1) the earning math on common small-business categories, (2) simplicity of ongoing use, (3) cash-flow friendliness (like intro APR offers), and (4) issuer acceptance and ecosystem. All key card attributes were verified against public information as of September 2025.
If you want flexible working capital you can draw, repay, and reuse, a business line of credit (LOC) beats taking repeated term loans. Below are this year’s strongest options by use‑case, plus a quick way to compare costs and a simple Beancount recipe for recording draws, interest, and fees.
Fast, flexible fintech line:Bluevine — up to $250k, weekly or monthly repayment, funding often within 24 hours, rates advertised “as low as 7.8% (simple interest).”
Fee‑based draws with multiple terms:American Express Business Blueprint® Line of Credit — line sizes $2k–$250k; choose 1–3‑month single‑repayment loans or 6–24‑month installment loans with fixed loan fees (not APR).
Prime‑based bank line with clear pricing:Wells Fargo BusinessLine® / Prime Line — BusinessLine: Prime + 1.75% to +9.75%; Prime Line: Prime + 0.50% (floor 5%); typical credit limits $10k–$150k.
Relationship pricing & a way to “graduate”:Bank of America — unsecured Business Advantage line (relationship discounts 0.25–0.75%); or Cash‑Secured line where your deposit sets the limit (from $1,000), helpful to build business credit.
Branch + national reach:Chase Business Line of Credit — online up to $250k, 5‑year revolving period then 5‑year repayment (available in 48 states).
Up to $250k with clear annual fee policy:U.S. Bank Cash Flow Manager — lines to $250k; unsecured option to $100k; no annual fee if line > $50k (otherwise $150).
Newer businesses that need speed (know the cost):Headway Capital — $5k–$100k, calculator shows starting ~3.3% monthly + 2% draw fee.
Fast approvals but typically expensive:OnDeck LOC — up to $200k; company‑reported average APR ~56.6% for lines (H1’25).
For bigger, lower‑rate, monitored lines (if you qualify):SBA lines — classic CAPLines umbrella programs and the newer 7(a) Working Capital Pilot (WCP). WCP lets lenders issue monitored revolving lines up to $5M with an SBA guaranty.
Two key trends are shaping the business credit landscape this year:
Prime settled lower than 2023 highs. The Wall Street Journal Prime Rate is 7.50% (as of September 2, 2025), last changed on December 19, 2024. This is the benchmark rate that directly feeds the pricing for most variable-rate bank lines of credit (which are typically priced as "Prime + a margin"). A stable, lower Prime Rate means more predictable costs for borrowers.
SBA rolled out/expanded monitored working‑capital lines. The 7(a) Working Capital Pilot (WCP) program, effective August 1, 2024, continues to expand. It enables lenders to issue asset- or transaction-based monitored LOCs, which is a huge help for businesses needing financing for inventory, receivables, or specific contracts.
Snapshot: Popular lines of credit you can actually get
Provider
Max line size
How pricing works
Notable terms/fees
Best for
Bluevine
$250,000
Simple‑interest rates “as low as 7.8%”; weekly or monthly repayments
Funding often within 24 hours
Fast, flexible online LOC with straightforward draws
AmEx Business Blueprint®
$2,000–$250,000
Loan fee instead of interest; choose 1–3 mo. single‑repayment or 6–24 mo. installment
See posted fee ranges by term; instant deposit to AmEx Business Checking option
Predictable fees; choose short vs. longer payback per draw
Wells Fargo BusinessLine®
$10,000–$150,000
Variable Prime + 1.75% to +9.75%
Unsecured revolving line
Prime‑based bank line with transparent margin
Wells Fargo Prime Line
Varies
Prime + 0.50% (min floor 5%)
Generally for stronger profiles
Lower‑margin option if you qualify
Chase Business LOC
Online to $250,000
Variable (not publicly posted online)
5‑yr revolving, then 5‑yr repayment; not in AK/HI
Established bank LOC with long revolving window
U.S. Bank Cash Flow Manager
Up to $250,000
Variable; secured & unsecured options
Unsecured up to $100k; no annual fee > $50k (else $150)
Index & Margin: If it’s a bank line priced as "Prime ± X%", check today’s Prime Rate (7.50%) and add the margin you’re offered. That’s your current variable Annual Percentage Rate (APR).
Fee‑based vs. Interest‑based: Some fintechs (like AmEx Blueprint) charge a fixed "loan fee" per draw instead of interest. Compare the effective APR of that fee to interest-based offers before deciding.
Annual/Draw Fees: These add to your total cost, especially if you use the line infrequently. U.S. Bank waives its $150 annual fee for lines over $50k, while PNC lists a $175 fee for its unsecured LOC.
Repayment Cadence: Weekly payments (common with online lenders) can smooth out cash flow but require more frequent management. Monthly payments simplify bookkeeping. Bluevine offers both weekly and monthly options.
Funding Speed: If you need cash now, speed is critical. Bluevine often funds within 24 hours, and American Express offers instant deposits on draws to an AmEx Business Checking account.
Eligibility & Graduation Path: If you can't qualify for an unsecured line yet, a product like Bank of America’s cash‑secured line (starting at $1,000) can help you build business credit and "graduate" to an unsecured line later.
Consider SBA for Size or Structure: For larger needs tied to inventory, receivables, or contracts, the SBA's 7(a) WCP or CAPLines programs can provide larger, monitored lines at regulated rates, provided you can handle the more in-depth underwriting.
Comparing offers can be tricky. Here's a simple way to think about it:
Prime‑based example: If a bank offers you Prime + 2.75%, your starting APR today is 10.25% (7.50% + 2.75%). Remember, this rate will float up or down if the Prime Rate changes.
Fee‑based example (AmEx Blueprint): A 12-month draw with a 6–18% total loan fee might seem low. However, to compare apples-to-apples, you must compute the equivalent APR on the amortizing balance. A fixed fee on the initial draw amount is not the same as an APR on a declining balance.
For users of the plain-text accounting tool Beancount, tracking a line of credit is straightforward. The LOC is a liability; draws increase that liability and your cash, while interest and fees are expenses. Replace the account names below to match your own ledger.
1) Draw $25,000 from your LOC to your checking account
An SBA-guaranteed line isn't for everyone, but it's a powerful tool if:
You need a bigger credit limit than what most fintech or bank unsecured products offer.
Your working capital needs are tied to collateral like accounts receivable (A/R), inventory, or signed contracts.
You can handle the monitoring requirements, such as submitting borrowing base certificates and regular financial reporting.
If this sounds like your business, look into the SBA CAPLines programs and the 7(a) Working Capital Pilot (WCP). These programs can facilitate lines up to $5M, and standard CAPLines can have maturities of up to 10 years.
Be prepared. Most lenders will ask for the following:
Time in business, revenue, and credit score: Banks typically want 1–2+ years in business and stronger credit, while many online lenders have more flexible criteria but price for the added risk.
Financials: Have your recent bank statements, business tax returns, and potentially A/R aging or inventory reports ready.
Personal Guaranty: This is a standard requirement for most business lines of credit. It means you are personally responsible for repaying the debt if the business cannot.
A line of credit is about control: draw what you need, when you need it. In 2025, Prime-based bank lines remain attractive for those who qualify, while fintech lines trade higher costs for incredible speed and flexibility. For larger, more complex needs, SBA-backed lines unlock structured facilities. The key is to run the numbers (always convert fees to an effective APR), understand the fee structure, and pick a repayment schedule that keeps your business financially healthy—and your Beancount ledger clean.
