Business Line of Credit Rates — February 2026

Business lines of credit provide flexible, revolving access to capital — you borrow only what you need and pay interest only on what you use. As of February 2026, line of credit rates reflect the improved rate environment following the Federal Reserve's cuts in late 2025.

Rates vary dramatically based on whether you work with a traditional bank or an online lender, your credit profile, and whether the line is secured or unsecured. This guide covers current rates across all major categories.

Current Prime Rate: 6.75%

Most business lines of credit price as Prime Rate plus a spread. With the current prime rate at 6.75% (down from 8.50% in mid-2024), borrowing costs have improved meaningfully for qualified businesses.

Line of Credit Rates by Lender Type

The type of lender you choose has the biggest impact on your rate:

Bank Line of Credit Breakdown

For businesses that qualify, bank lines of credit offer the most competitive rates. Here is how major banks typically price their business lines:

Example from Wells Fargo: Their BusinessLine product prices at Prime + 1.75% to Prime + 9.75% depending on your credit evaluation, translating to 8.50%-16.50% at current prime.

Online Lender Rates

Online lenders serve businesses that cannot qualify for bank lines or need faster access to capital:

Rates by Credit Tier

Your credit profile largely determines which lenders will work with you and at what rate:

Secured vs. Unsecured Lines

Whether your line is secured by collateral affects both rates and available credit:

Secured lines backed by real estate or receivables often carry the lowest rates. If you have eligible collateral, securing your line can save 2-5% in annual interest.

Common Fees Beyond Interest

Line of credit costs include more than the stated APR. Watch for these common fees:

• Draw fees — 1-2% per draw with some online lenders. Can add significantly to cost if you draw frequently.
• Annual/maintenance fees — $100-$500/year common with bank lines. Charged whether you use the line or not.
• Origination fees — 0-3% of credit limit upfront. More common with online lenders.
• Inactivity fees — Some lenders charge if you do not use the line for extended periods.
• Minimum interest charges — Minimum monthly interest regardless of balance.
• Early termination fees — Penalty for closing the line early. Read terms carefully.

SBA CAPLines Program

The SBA offers lines of credit through its CAPLines program, providing an alternative to conventional bank lines:

SBA lines require more documentation and take longer to establish than conventional lines, but offer longer terms and may have more favorable structures for certain business types.

Qualification Requirements

Here is what lenders typically require for business lines of credit:

How to Get the Best Rate

Follow these strategies to secure the most competitive line of credit rate:

• Build your credit — Personal FICO above 720 opens bank options at the best rates
• Establish a banking relationship — Existing customers often get preferred pricing
• Offer collateral — Secured lines carry lower rates than unsecured
• Shop multiple lenders — Compare at least 3 offers; spreads vary significantly
• Negotiate fees — Annual fees and other charges are often negotiable
• Consider credit unions — Member-owned institutions often beat bank rates
• Review timing — Some lenders offer promotional rates for new lines

When Lines of Credit Make Sense

Lines of credit work best for specific situations:

• Seasonal cash flow gaps — Draw during slow periods, repay during busy seasons
• Unpredictable expenses — Emergency repairs, unexpected opportunities
• Managing receivables — Bridge cash flow while waiting for customer payments
• Inventory purchases — Buy inventory at quantity discounts, repay as it sells
• Short-term working capital — Cover payroll, rent, or operating expenses

Lines of credit are not ideal for long-term financing needs, large capital expenditures, or fixed monthly payment requirements. For those situations, term loans typically offer better economics.