The Ultimate Guide to the Capital One Business Line of Credit

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The Capital One Business Line of Credit

On your search for the perfect business funding options for your small business, you might have come across the Capital One business line of credit.

Curious to learn more about what this business funding option can offer small business owners like you?

Let’s start with the fundamentals—first, we’ll go over what a business line of credit is exactly, and what makes it different from a business credit card.

Every business line of credit varies based on its issuer, though. So after we cover the basics, we’ll take a deep dive into all there is to know about this Capital One business loan.

Capital One comes in as one of the best banks for business loans. But is the Capital One business line of credit the perfect business funding fit for you?

Let’s figure it out.

How Does a Business Line of Credit Work?

For starters, if you don’t already, you probably want to get a good idea of how a business line of credit works exactly.

Before we go through the details of the Capital One business line of credit, let’s cover the general features that business lines of credit at large can offer small business owners.

The business line of credit is a trusty form of business funding that functions a bit like a combination between a traditional business loan and a business credit card.

Though you won’t have an actual physical card for your business line of credit, you’ll be able to spend up to your credit limit, and you’ll only have to pay interest on the amount you borrow.

The business line of credit is a great funding option to have in your back pocket in case your business hits a dry spell or happens upon a time-sensitive investment opportunity.

How is a Business Line of Credit Different From a Business Credit Card?

Now, you might be thinking that it essentially functions exactly the same as a business credit card.

Well, by-and-large, you’re pretty much right. Business lines of credit work very similarly to business credit cards. However, there are a few crucial differences that are important to know about before you decide to fund with the Capital One business line of credit.

Let’s check them out.

    Lower APRs

    First of all, business lines of credit tend to have lower APRs than business credit cards. This could be a huge deal for business owners who will have to carry a balance from month to month with their business credit.

    Depending on how big of a balance you’ll need to carry, even just a half a percent lower APR could save your business a huge sum of cash.

    Less Regimented Payment

    Next up on the list of differences between business lines of credit and business credit cards?
    Business lines of credit tend to have less regimented payment plans than business credit cards.

    With a business credit card, you can be sure that you’ll be paying bills on the same day every month, if not earlier.

    With business lines of credit, however, this might not necessarily be the case.

    Lenders that offer business lines of credit are typically more willing to work with business owners to figure out a payment schedule that works best for them.

    Cash Advances Without Fees

    One of the most notable differences between business lines of credit and business credit cards?

    With business lines of credit, you’re dealing with cash.

    On the other hand, with business credit cards, you have to pay extremely high APRs for taking out cash. These cash advance APRs are typically much higher than your regular balance APR, and they set in from the moment you take the cash out.

    If your business is often in need of cash, then you should probably opt for the business line of credit over a business credit card.

    No Rewards

    Up until now, you’ve probably wondered why anyone would ever choose a business credit card over a business line of credit.

    However, all those perks that the business line of credit offers aside, business credit cards offer one huge perk that might overshadow them: their rewards programs.

    With business credit cards, you can rack up rewards points or cash back just buy spending on your business.

    Even better? With business credit cards, you can often access 0% intro APR periods, and some of them can last as long as 15 months.

    So though credit cards might not be able to offer the practicalities that business lines of credit can, these credit card perks can sometimes cancel out any money you might have saved if you had opted for a business line of credit.

    Harder to Qualify For

    Another aspect of the business line of credit vs. credit card debate is that business lines of credit are typically harder to qualify for than a credit card.

    For a business credit card, you’ll mainly just need to show a strong credit score to qualify.

    And while your credit score is very important in the business line of credit approval process, it’s just a piece of the information a line of credit lender will look at before approving your application.

    They’ll also look at your time in business, your cash flow, your average bank balance, your profitability, and so on.

The Details of the Capital One Business Line of Credit

The Capital One business line of credit works best for business owners looking to secure some working capital.

In fact, Capital One specifically calls their business lines of credit working capital lines of credit.

Capital One business lines of credit start at a minimum line of credit of $10,000, and there’s no cap to how large of a line of credit you can secure with them.

Even more, if you apply for a business line of credit for less than $50,000, Capital One won’t require a financial statement for you to secure the business line of credit.

The Capital One business line of credit, like most business lines of credit, is a revolving line of credit, which means that as long as you pay back how much you spend, there’s no limit to how many times over you can use your business line of credit.

As for APRs, Capital One doesn’t set a specific APR range for their business lines of credit. Instead, APRs for Capital One business lines of credit are determined on a case-by-case status with respect to your creditworthiness and your business’s financial status.

And though many business lines of credit options offer more flexible payment plans, the Capital One business line of credit will require that you make monthly payments for every month that you tap into your business line of credit.

When Should I get a Capital One Business Line of Credit Instead of a Capital One Spark Business Credit Card?

Though you might bee-line for a Capital One Spark Card because of their stellar rewards, in some cases, a Capital One business line of credit might be a better fit for your business.

For one, if you’re looking for a chance at a lower APR than you might be able to get with a Spark Card, then a Capital One business line of credit will likely be able to provide you with a cheaper way to carry a balance from month to month.

Additionally, if your business will need easy access to cash without incurring fees, then the Capital One business line of credit is the better option for you.

The good news?

If you’re not absolutely determined to only have one funding source, Spark Cards and a Capital One business line of credit aren’t mutually exclusive by any means. In fact, they work really well together.

If you’re torn between the perks that both options offer, consider securing both for you business.

How to Qualify for a Capital One Business Line of Credit

Does the Capital One business line of credit sound like the perfect funding fit for your business? Great!

The next step is qualifying, and then you’ll see what type of terms your qualify for.

Capital One business lines of credit come with these minimum credentials to qualify:

  • At least 2 years of business history
  • A Capital One business checking account
  • Combined 50% ownership of the business

The Advantages and Disadvantages of the Capital One Business Line of Credit

The Advantages of the Capital One Business Line of Credit

Now that we’ve gone through the rundown on the Capital One business line of credit, it’s time to revisit its features that make it a good contender for your business funding short list.

Some of the main advantages of funding with the Capital One business line of credit are essentially the general advantages of funding with lines of credit. But let’s take a look at what each of these advantages look within this specific funding option.

    No Financial Statements for Amounts Under $50,000

    Because many small business owners will be opting for a business line of credit on the smaller end, this is huge news.

    If you qualify for a Capital One business line of credit from $10,000 to $49,999, then you won’t have to provide a financial statement to secure the line of credit.

    This can facilitate and speed up your application process so that you can jump start your business’s cash flow quicker.

    Case by Case Terms

    Because there’s no set APR range for the Capital One business line of credit, you’ll know that the terms you receive will be tailored for your business, rather than made to arbitrarily fit a certain range.

    Only Pay as You Spend

    Being able to pay only according to what you spend is just an advantage of business lines of credit in general, but it bears repeating.

    With the Capital One business line of credit, you’ll only have to pay off the amount you spend.

    Let’s say you won’t need to dip into your business line of credit one month—well, that month you won’t have to make any payments towards your business line of credit.

    Because you only have to pay as you spend, the business line of credit is an essential for small business owners.

The Disadvantages of the Capital One Business Line of Credit

With all that said, it’s important to note that, just like any other business funding source, Capital One business lines of credit aren’t perfect.

As such, it’s prudent to take a good long look at all the disadvantages the Capital One business line of credit comes with.

Here are a few features that might make you hesitate on funding with the Capital One business line of credit.

    More Regimented Payment Schedule

    With some business line of credit funding options, lender might allow you a little more wiggle room with your payment schedules.

    With the Capital One business line of credit, though, you’ll have a similar payment schedule to if you were spending with a business credit card.

    If you’re looking for a more flexible payment schedule than every month on the month, then you might want to explore the many different business line of credit options out there.

    One different bank loan for business to pursue is a Wells Fargo business line of credit, or a Chase business line of credit.

    Not Available for Newer Companies

    While other business line of credit options might be great choices for younger companies, the Capital One business line of credit is only available to companies who have been in business for two years or more.

    Put simply, if you’re a newer company that has less than two years of business history, then you’re going to have to explore funding options other than the Capital One business line of credit. Newer businesses that want a high quality loan product might consider American Express merchant financing.

The Alternatives to the Capital One Business Line of Credit

Does a business line of credit sound like a great fit for your small business?

Even if the Capital One business line of credit sounds like a great choice, it’s important to take some time to see how it compares to other business line of credit options available to you.

Let’s parse through some of the other business lines of credit that might be better options for you than the Capital One business line of credit.

Kabbage Business Line of Credit

Kabbage, a top-rated online lender, specializes in short-term business lines of credit.

Kabbage offers this product in values anywhere from $2,000 to $150,000 with terms from 6 to 12 months.

You’ll only have to have a minimum of 1 year of business history to qualify for a Kabbage line of credit, and there’s no minimum FICO credit score that they work with. Plus, Kabbage could fund your business line of credit in as little as a day.

Overall, the Kabbage line of credit is more accessible than the Capital One business line of credit.

OnDeck Business Line of Credit

Another top-rated online lender, OnDeck, also offers a business line of credit that’s optimal for startups and new businesses.

OnDeck’s business lines of credit can range from $5,000 to $100,000 and all last for a term of 6 months.

Good news for new businesses? OnDeck funds their business line of credit to business with as little as 9 months in business.

BlueVine Business Line of Credit

Last up in the best alternatives to the Capital One business line of credit is a business line of credit from another top online lender. BlueVine offers business lines of credit ranging from $6,000 to $150,000. As for terms, you can either secure a fixed business line of credit with BlueVine for 6 months or 12 month.

The 12 month BlueVine line of credit, called Flex12, comes with a monthly payment plan, but the 6 month option offers more flexibility.

The best part?

BlueVine offers business lines of credit to businesses with as little as 6 months of business history, which makes it the most accessible option for new businesses on this list.

See If I Qualify

The Bottom Line on the Capital One Business Line of Credit

So, after combing through all there is to know about the Capital One business line of credit, what’s the verdict on this business funding option?

Well, as business lines of credit go, the Capital One business line of credit is a pretty straightforward option.

However, there are a few peculiarities that the Capital One business line of credit features that many business lines of credit normally don’t. It’s true—every funding option out there, even if it’s under a widely-used product title, comes with its own unique features.

Just like no two small businesses are alike, no two funding options are exactly the same. It’s daunting to wrap your head around it, but if you take the time to explore all of your business funding options in detail, you’ll likely be able to find a product that’s practically tailored for you and your business.

Is the Capital One business line of credit not quite the right fit? Let’s explore your business funding options together.

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Vice President and Founding Editor at Fundera

Meredith Wood

Meredith Wood is the founding editor of the Fundera Ledger and a vice president at Fundera. She launched the Fundera Ledger in 2014 and has specialized in financial advice for small business owners for almost a decade. Meredith is frequently sought out for her expertise in small business lending. She is a monthly columnist for AllBusiness, and her advice has appeared in the SBA, SCORE, Yahoo, Amex OPEN Forum, Fox Business, American Banker, Small Business Trends, MyCorporation, Small Biz Daily, StartupNation, and more. Email: meredith@fundera.com.
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