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Business Line of Credit for Bad Credit—Your 3 Best Options

Meredith Wood

Meredith Wood

Editor-in-Chief at Fundera
Meredith is Editor-in-Chief at Fundera. Specializing in financial advice for small business owners, Meredith is a current and past contributor to Yahoo!, Amex OPEN Forum, Fox Business, SCORE, AllBusiness and more.
Meredith Wood

If you have limited or poor credit, then considering a business line of credit for bad credit could be a smart move—either on its own or coupled with another small business loan.

A business credit line can give you easy access to working capital that you can use to cover your business’s expenses.

What if you have a less-than-desirable credit score? Can you still get a business line of credit for bad credit?

Fortunately, there are still options you can consider if you’re looking for a business line of credit for bad credit.

If you’re totally lost right now: don’t worry, we’ll break this all down below.

What Is “Bad Credit?”

Before we dive into the best business line of credit for bad credit, let’s make sure you understand what constitutes “bad credit.”

A credit score, as you might know, is a mark of your reliability. Specifically, it is a number, generated from various factors, that determines how likely you are to pay your bills on time.

Factors that affect your credit score are:

  • Amount of debt you have
  • Age of your open credit accounts
  • Diversity of credit accounts
  • Payment history (including bankruptcies and judgments)
  • Tax liens
  • Hard credit inquiries
  • Credit utilization (or how much of your credit is being used)

What is classified as “bad credit” can vary, and lenders will evaluate credit in conjunction with your other business attributes—like revenue or time in business.

Typically, if you have a credit score of 620 or below, it will be more difficult to qualify for long-term loans or an SBA loan—but maybe not impossible. Plus, you still have a good chance of qualifying for a short-term loan or business line of credit.


Having bad credit is a pain. It can hinder you from getting financing for your business needs. Having good credit means you have more options and better rates.

The lower the score, the more you will need to shine in other areas to qualify for a business line of credit. But don’t despair—when it comes to business line of credit for bad credit, you have options.

First, let’s make sure you understand the difference between business credit and personal credit.

Business Credit vs. Personal Credit

If you own a business, you have two credit scores: a business credit score and a personal credit score.

This is why it’s important to keep your personal and business finances separate.

There are a few companies that calculate these scores.

For businesses, it’s Experian, Equifax, and Dun & Bradstreet.

For your personal score, it’s Experian, Equifax, and TransUnion.

You can obtain your scores from these company websites, or through sites like

Lenders will look at both of these to determine eligibility.

What Is a Business Line of Credit?

A business line of credit is flexible, revolving capital—similar to a credit card—except you get access to cash and, in many cases, lower APRs. And there are many business line of credit for bad credit options available.

Lines of credit are agreements between lenders and borrowers that give a maximum loan balance that the borrower can pull funds from. With a line of credit, you can borrow funds at any time as long as you don’t exceed the maximum amount. Plus, you only have to pay interest on the funds you draw.

A business line of credit gives you capital to meet a variety of needs for your business—like covering payroll, buying inventory, and handling seasonal cash flow gaps. A business line of credit will give you easy access to cover day-to-day cash flow needs.

Why You Might Need a Business Line of Credit

Plenty of financing options are out there—even if you have poor credit, including short-term loans for bad credit and merchant cash advances, among others.


But here are the reasons a business line of credit might be a good option for you.

  1. If you need quick access to funds: When you’re facing a cash crunch, you don’t have time to apply for a loan. You need cash fast. Access to a small business line of credit makes that money available to you for short or longer term needs. You need a business line of credit for bad credit.
  2. If you need to cover seasonal or temporary expenses: Did you have an emergency like breaking a computer? Does your business have an off-season, contributing to cash flow issues? Your small business line of credit is perfect to back you up in either case.
  3. If you want more control: If you have to draw on your line of credit to get over a temporary cash crunch, you’ll only pay interest on the amount you withdrew until you can pay it back. Whereas with a business loan, you’re paying interest on the entire amount, even if you don’t use all the funds at once. It’s a good way to be mindful of what you spend.
  4. If you have no collateral to offer: Most small business lines of credit under $100,000 are “unsecured.” This means that if you don’t have any collateral or need it for other things, you’ll be in good shape with a small business line of credit for bad credit.
  5. If you want to increase your credit score: A line of credit is a great way to build up a bad credit score if you have one, so long as you make all your payments on time.
  6. If you want some peace of mind: Even if you rarely or never need to draw on it, you can rest easy knowing that you have access to backup funds.

If You Have Bad Credit, What Do You Do?

If you need access to capital sooner than later, and don’t have time to work on raising your credit score, there’s still hope.

To obtain a line of credit, you will probably need to supply some financial information about your business as well as yourself, so be prepared with income and other statements or tax returns.

Fortunately, it’s not just about your credit score. There are other factors of your business that matter to lenders.

1. Annual Revenue

One of the most important parts of your application is your business’s annual revenue.

The more you bring in, the better.

That should come as no surprise. A high revenue proves to lenders that you know what you’re doing—and that your business is a worthwhile investment for them to make.

Generally speaking, the line of credit you’ll qualify for will be around 8%-12% of your annual revenue.

Many online lenders require minimum annual revenue amounts ranging from $25,000-$500,000.

2. Current Debt Obligation

If you’re currently paying back a business loan, you might have trouble qualifying for a second product, even a business line of credit for bad credit.


Most lenders don’t want to take what’s called “second position” to another lender.

In other words, if you go bankrupt and your assets get liquidated, that original lender will be compensated for your remaining debt, leaving a second lender in a tricky position.

If a lender took second position to someone else, it means they wouldn’t get their money until the lender in first position is completely paid back.

With that in mind, if you don’t have any other debt obligation at this time, this will be a good sign to lenders.

3. Cash Flow

Lenders want to know how well you manage your cash flow—and how much cash you tend to keep on hand.

Every lender’s main concern is whether you’ll be able to make their loan payments, so demonstrating that your business makes and keeps enough money to afford those regular expenses will go a long way to helping you qualify for a business line of credit for bad credit.

To understand your cash flow, nearly every lender will want to see at least three months of your business bank statements.

However, if you have a history of NSFs (non-sufficient funds), you might want to wait a few months before applying for a line of credit. Use that extra time to carefully manage your bank account, making sure it looks 100% lender-friendly.

No matter what, be prepared to talk through your financial history if you know these factors can be found on your credit report.

The Best Business Line of Credit for Bad Credit

If you have good credit, the first place you would probably go as a source for a credit line would be your own bank. Unfortunately, if you have bad credit, this is likely not an option.


Fortunately, you still have many sources for small business line of credit for bad credit. To find the perfect fit and absolute best terms, you should plan to comparison shop among several lenders.

Below are some of the best options to consider from online lenders if you have bad credit.

Headway Capital

Headway Capital offers a line of credit up to $50,000 in revolving funds for small business owners. One of the benefits is that you can choose between monthly or weekly payment options and terms up to 24 months with no early pay-off fees.

Headway Capital is one of the easiest business line of credit for bad credit to qualify for online. They have a quick application, simple document requests, and can get an answer to you in an under a week.

They also have some of the least stringent eligibility requirements to boot:

  • Only 50,000 in annual revenue
  • Only need to have been in business for six months
  • Profitability is preferred but not always necessary
  • And best of all, they require no minimum credit score

If you’re running a young business that’s still building up your credit and revenue, Headway Capital is a good option to get access to capital for times when your business might need it unexpectedly.

However, since Headway Capital is the easiest to qualify for, they also have the highest interest rates and lowest loan amounts.

Headway Capital provides:

  • Loans from $5,000-$50,000
  • Terms between 12-24 months
  • Rates between 40%-80% APR

If you can qualify for something better, it’s definitely better to go that route. But if you can’t and really need the cash, Headway Capital is your best bet for a business line of credit for bad credit.


Fundbox provides invoice financing that acts like a line of credit.

It’s one of the easiest financing options to qualify for. Here’s what you need to qualify for a Fundbox line of credit:

  • A business run on invoices
  • No set annual revenue requirement
  • At least three months in business
  • No minimum credit score—they don’t even check it
  • No profitability required.

Fundbox does not require personal credit to get started. Instead, they use a custom-built business health assessment to determine your credit eligibility and limit by reviewing the data you share with them.  

You only need to connect Fundbox to your business bank account—nothing else.

When you keep your Fundbox account connected, you’ll know what invoices are eligible for advances. When you need the cash, you can clear an invoice and pay it back over the 12 weeks or even earlier if you want—and save on the fees.

Here’s what a Fundbox line of credit will get you:

  • Loans between $100-$100,000
  • Terms up to 12 weeks
  • A rate of approximately 0.5% of the invoice value per week.
  • Access to funds in 1 to 5 days

If you have a lot of unpaid invoices disrupting your short-term cash flow, Fundbox might be a good business line of credit for bad credit option for you.


Kabbage is a good option if your business is more established. So perhaps not the best business line of credit for bad credit option, but a good one if you can qualify.

Like Fundbox, Kabbage lets business owners link up their online financial services, including Intuit QuickBooks, business checking accounts, and Square. Kabbage determines financial performance by analyzing real-time metrics like average monthly revenue, seller rating, and transaction volume.

Kabbage also uses their “nontraditional” metrics to determine the amount of cash that can be made available to you, including  an active and robust social media following.

All of this information is plugged into Kabbage’s underwriting platform, which provides an automated decision within minutes.

Here’s what’s required at a minimum:

  • At least one year in business
  • At least $50,000 in annual revenue
  • No minimum credit score

This makes Kabbage a good option if you’ve been in business for awhile but still have bad credit. If you do qualify, this is what a Kabbage line of credit can get you:

  • Loans between $2,000 and $150,000
  • Terms between 6 to 12 months
  • Rates between 24%-99%

The only reason you wouldn’t apply for a Kabbage line of credit is if you can qualify for something with a better rate, but most lenders like Kabbage and Kabbage competitors have similar rates.


A bad credit score might create problems when you try to secure funds for your business, but there are still plenty of business line of credit for bad credit options. You just need to understand your needs and look for options that meet your requirements.

You might get higher rates than other options, but if you really need the cash and don’t qualify for anything else, these options are your best bet.

Editorial Note: Any opinions, analyses, reviews or recommendations expressed in this article are those of the author’s alone, and have not been reviewed, approved, or otherwise endorsed by any of these entities.
Meredith Wood

Meredith Wood

Editor-in-Chief at Fundera
Meredith is Editor-in-Chief at Fundera. Specializing in financial advice for small business owners, Meredith is a current and past contributor to Yahoo!, Amex OPEN Forum, Fox Business, SCORE, AllBusiness and more.
Meredith Wood

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