Business Line of Credit vs. MCA: Side-by-Side Comparison
| Feature | Bank Business LOC | Fintech LOC (Kabbage/Bluevine) | MCA (Merchant Cash Advance) |
|---|---|---|---|
| Min. FICO | 680+ | 625+ | 500+ |
| Time in business | 2+ years | 1-2 years | 4+ months |
| Bank decline OK | N/A | Usually no | Yes |
| Collateral required | Often yes | No | No |
| Funding speed | 2-8 weeks | 1-5 days | 1-3 days (same-day possible) |
| Monthly revenue req. | Varies (usually $15K+) | $10K+/mo | $8K+/mo |
| Cost structure | Interest on draws (8-12% APR) | 2-3%/month on draws (24-36% APR) | Fixed factor rate (know total before signing) |
| Repayment | Monthly interest payment | Weekly or monthly | % of daily deposits — adjusts with revenue |
When to Pursue a Business Line of Credit
A business line of credit is the right tool when you meet the requirements and need revolving flexibility — the ability to draw, repay, and draw again without applying each time. It is the cheapest form of business credit if you qualify.
You should pursue a business LOC if:
- Credit score is 680+ with consistent history
- 2+ years in business with profitable tax returns
- You need ongoing revolving access, not a one-time lump sum
- You can wait 2-8 weeks for underwriting and approval
- You want the lowest possible cost of capital
When MCA Is the Better Fit
For the majority of small business owners — especially those who've been declined by banks, have credit under 680, or are under 2 years in business — a merchant cash advance is the most realistic path to working capital.
Credit below 680
MCA minimum is 500 FICO. Revenue matters more than credit score.
Need capital fast
MCA decision in 2-4 hours. Funds in 1-3 days. LOC takes 2-8 weeks.
Bank already declined
Bank decline doesn't affect MCA eligibility — different underwriting model.
Under 2 years in business
MCA requires 4+ months. No long business history needed.
Check Your MCA Eligibility — 2 Minutes
500 FICO minimum · Bank declines OK · No collateral required
Business Line of Credit FAQ
What is a business line of credit?
A business line of credit (LOC) is a revolving credit facility that lets you borrow up to a set limit, repay, and borrow again. Unlike a term loan, you only pay interest on what you draw. LOCs are ideal for managing cash flow gaps and recurring short-term needs. However, they typically require 680+ FICO, 2+ years in business, and strong financial statements — disqualifying most small businesses with credit below 680.
What is the difference between a business line of credit and a merchant cash advance?
A business line of credit is a revolving credit product with an interest rate, typically requiring 680+ FICO, 2+ years in business, and strong financials. It functions like a credit card for the business. A merchant cash advance (MCA) provides a lump sum of capital repaid as a percentage of daily revenue. MCA requires only 500 FICO and 4+ months in business — significantly more accessible than a business LOC, and funded in 1-3 days vs. weeks for a bank LOC.
Can I get a business line of credit with bad credit?
Traditional bank lines of credit require 680+ FICO. If your credit score is below 680, a merchant cash advance is typically the most accessible alternative — 500 FICO minimum, approved on monthly revenue, funded in 1-3 days. Some fintech lenders offer credit lines to 600+ FICO applicants, but these usually carry higher fees than advertised and require longer business history.
How much does a business line of credit cost?
Bank business line of credit: typically Prime rate + 1-3% (roughly 8-12% APR currently). Fintech business LOC (Kabbage, BlueVine): 2-3% monthly draw fee (roughly 24-36% APR). Merchant cash advance: factor rate of 1.10-1.50 on total advance (equivalent to 40-150% APR depending on repayment speed, but total cost is fixed — you know exactly what you will repay before signing).
How long does it take to get approved for a business line of credit?
Bank business LOC: 2-4 weeks minimum; often 30-60 days for full underwriting. Fintech business LOC: 1-5 days, but typically requires 1-2 years in business and strong revenue. Merchant cash advance (if you qualify for an LOC alternative): 2-4 hours for a decision, funded in 1-3 business days.