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The 4 Best Business Lines Of Credit For Bad Credit

While lines of credit for bad credit borrowers are difficult to find, it's not impossible. Get access to the flexible funding you need with these four options.

    Jason Vissers

  • Last updated onUpdated

    • Erica Seppala

  • REVIEWED BY

    Erica Seppala

    Editor & Senior Staff Writer

Advertiser Disclosure: Our unbiased reviews and content are supported in part by affiliate partnerships, and we adhere to strict guidelines to preserve editorial integrity.

Wouldn’t it be great to have on-demand access to cash whenever it was needed? As it happens, there is a small business financing solution that works like this: a business line of credit.

But what if you have poor credit? You may have tried to qualify for one of the top small business loans in the past but were turned down. Thankfully, business lines of credit are available to everyone, even applicants with low credit scores.

Read on for a detailed look at business lines of credit. We’ll explain what they are, how you can use them, and how to obtain one — even if you have less-than-perfect credit. We’ll then list some accessible LOC options.

Learn More About Our Top Picks

CompanyBest ForNext StepsBest For
BusinessLoans.com

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  • Offers lines of credit, short-term loans, term loans, & MCAs
  • FICO: No minimum
  • APR: Varies by lender
  • Offers lines of credit, short-term loans, term loans, & MCAs
  • FICO: No minimum
  • APR: Varies by lender

Visit Site

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Lendio

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  • Offers lines of credit, term loans, short-term loans, SBA loans, MCAs, & equipment financing
  • FICO: 600+ recommended (not required) for an LOC
  • APR: 8-60%
  • Offers lines of credit, term loans, short-term loans, SBA loans, MCAs, & equipment financing
  • FICO: 600+ recommended (not required) for an LOC
  • APR: 8-60%

Apply Now

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Headway Capital

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  • Offers lines of credit
  • FICO: 560+
  • APR: Starts at 3.3%
  • Offers lines of credit
  • FICO: 560+
  • APR: Starts at 3.3%

Visit Site

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National Business Capital

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  • Offers lines of credit, term loans, short-term loans, SBA loans, MCAs, & equipment financing
  • FICO: No minimum
  • APR: Varies by lender
  • Offers lines of credit, term loans, short-term loans, SBA loans, MCAs, & equipment financing
  • FICO: No minimum
  • APR: Varies by lender

Apply Now

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Read more below to learn why we chose these options.

Table of Contents

What Is A Business Line Of Credit?

A business line of credit is a type of revolving credit. The lender provides the business owner with a credit limit. Much like they would with a credit card, the borrower can make as many draws as needed — up to and including the total credit limit — to get fast access to funding. Interest and fees are charged only on the balance that has been used by the borrower.

Once a borrower begins to make draws, the money is paid back at a later time on a scheduled basis, which could be weekly, monthly, or on another schedule set by the lender. Payments are made toward the principal balance as well as toward the interest and fees charged by the lender. As money gets paid back, it becomes available to borrow again.

Is A Credit Card A Type Of Line Of Credit?

Business credit cards are another type of revolving credit, and while very similar to lines of credit, they aren’t quite the same thing.

A credit card allows a borrower to make multiple purchases up to and including the set credit limit. Cards can be used for online purchases or at brick-and-mortar establishments that accept credit cards.

Cash draws can be made from a credit card, but they typically come with higher fees and interest rates. Plus, with most credit cards, you can only access a certain percentage of your total credit limit as a cash advance. When cash is needed, a line of credit is the better option.

However, there are benefits to using credit cards. Credit cards can be used immediately, while draws from lines of credit may take 24 hours or longer. Credit cards also offer rewards programs, allowing users to rack up airline miles, bonus points, and cash back with every use. Lines of credit do not provide these rewards.

When Should I Use A Line Of Credit?

A line of credit is handy any time you need quick access to money. A line of credit can be used when an emergency expense arises, and it can also be used for purchases that you’d rather pay off over time.

A line of credit can be used for any business expense. However, like other types of financing, lines of credit loans should only be used when needed. Interest and fees can make this a costly form of credit.

Before spending, ask yourself if the return on investment will be worth the cost or if there are more affordable alternatives available. If you do decide to make a draw, try to pay the balance off as quickly as possible to avoid paying unnecessary interest or fees.

When Should I Look For Other Financing Options?

In some scenarios, you may want to look into other financing options. For very large purchases, a long-term loan with a lower interest rate may be a more logical choice.

One of the main benefits of a line of credit is how fast you can receive the money you need. For emergencies, this may be the only option. However, if you are planning to make a purchase that isn’t an immediate need, it may be best to shop your options to find the most affordable type of financing.

What Is Considered Bad Credit?

Some lenders have their own standards to define bad credit, but in general, a score between 350 and 599 is considered poor.

A low credit score could occur for several reasons. A missed payment, foreclosure, collections, or bankruptcy can pull a credit score down quickly. Even having too many new accounts or high credit utilization can drag a score down. Unfortunately, most lenders don’t consider the circumstances and just see one thing with a low credit score: risk.

Why Is My Personal Credit Score Important?

Lenders consider borrower risk before approving a loan. The lower the risk, the more likely the lender will be to approve the loan. The higher the risk, the higher the chances of a rejected application. If a risky borrower is approved, interest rates are usually much higher, and terms are not as favorable.

Personal credit score plays a big role in assessing risk. Borrowers with high credit scores have more financing options and receive the best rates and terms. Borrowers with lower credit scores are limited in their options. They may qualify for lower amounts and suffer from higher overall loan costs. In some cases, borrowers with low scores will be unable to qualify for unsecured loans. These borrowers will have to put up collateral or pay a deposit for a secured loan.

How Quickly Can I Improve My Personal Credit Score?

Unfortunately, boosting your personal credit score isn’t an overnight process. While it’s possible to raise your score by a few points in just a few weeks, the process of raising your credit score from “bad” to “good” could take months — or in some cases, years.

The first step to improving your credit score is to pull your report and score to see where you stand. This can be done at no cost online. Look carefully through your report for any erroneous items that can be disputed with the credit bureaus. A mistake on your credit report will need to be proven to the creditor and then corrected or deleted.

If you have open lines of credit, make sure to pay your balances down as quickly as possible. Not only will this help you save on interest over time, but it will also lower your credit utilization, which in turn can help raise your credit score.

At the very least, make sure that you’re making minimum payments on all of your accounts each month. A late or missed payment can severely affect your credit score. Do not make too many inquiries into new accounts, and don’t open too many new accounts at the same time. All of these moves throw up a red flag to lenders.

Finally, raising your score can sometimes be a waiting game. Hard inquiries remain on your credit report for two years, while bankruptcies and foreclosures stay on your credit report for seven years. While you can work in other ways to build your credit in the meantime, only time will erase these past mistakes.

Is My Business Credit Score Important?

If you’re a business owner, you have a business credit score in addition to your personal score. A business credit score shows your business’s credit history and helps lenders assess whether or not you are a risky borrower.

Lines of credit, credit cards, and loans taken out for your business will all affect your business credit score. As with your personal credit, if you make late payments or miss payments on a business account, your score will be lower. Your business will be viewed as a riskier investment. If your score is high, lenders will feel more confident in giving you the financing you seek.

A business credit score is important when applying for financing, so it’s vital to boost your business credit score as much as possible. The best loan products, such as long-term bank loans and commercial mortgages, are reserved for borrowers with high personal and business credit scores.

For many lines of credit, a business’s credit score is considered by the lender when determining whether to approve your application.

The Best Bad Credit Business Lines Of Credit

Whether you have an emergency expense and need money quickly, or you just want to have a backup form of funding on hand for the future, a line of credit can be good for your business. Here, we’re highlighting the best lines of credit for borrowers with poor credit scores.

How The Best Bad Credit Business Lines Of Credit Compare

Line Of Credit Amount Credit Score Required Time In Business Required Business Revenue Required
BusinessLoans.com $5,000 to $3 million No requirement 6 months $100K/year
Lendio $1,000 to $250,000 600+ recommended (not required) 6 months $50K/year
Headway Capital $5,000 to $100,000 560+ 1 year $50K/year
National Business Capital $100,000 to $10 million No requirement 1 year $500K/year

BusinessLoans.com: Best Line Of Credit Marketplace For Bad Credit

BusinessLoans.com

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Read our Review

Total Rating 4.0
Rates & Fees4.6

Services4.0

Eligibility Requirements4.1

Application3.0

Sales & Advertising Transparency3.6

Customer Service4.1

User Reviews4.4



Pros

  • Funding up to $3 million
  • No minimum credit score required
  • Quick, easy application process
  • Same day funding possible

Cons

  • Nontransparent fees & rates
  • Funding can take a while to disburse
  • Rates can be high

Why BusinessLoans.com Is A Great Line Of Credit Marketplace

BusinessLoans.com doesn't originate loans. Rather, it is a business loan marketplace that matches your business with loan offers (offers drawn from the company's network of partner lenders) tailored to your particular business situation.

BusinessLoans.com doesn't require a minimum credit score to use its service -- the company will work to match you with a business line of credit no matter what your credit score. Your business will still need to meet certain revenue/time-in-business metrics, but if it does, BusinessLoans.com will work to get you offers for business lines of credit. Many other lending products are available as well.

BusinessLoans.com Services

BusinessLoans.com matches applicants to the following types of business funding:

BusinessLoans.com Rates & Fees

Your rates and fees will depend on the specific loan product and lender you get matched with. However, lending amounts generally range from $5,000 to $3 million.

BusinessLoans.com Eligibility Requirements

While BusinessLoans.com doesn’t require a minimum credit score, it does recommend that your business meet the following conditions:

  • 6+ months of business history
  • $100,000+ in annual business revenue

Thankfully, even if your business doesn’t quite meet these metrics, the company will still work to get you a line of credit (or other loan product) from a lender that will accommodate your business.

When To Use BusinessLoans.com

  • Your credit score is fair to poor and you’re looking for a business line of credit
  • You want to choose between offers for lines of credit (or other loan options) tailored to your business

Get Started With BusinessLoans.com

Read our in-depth review

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Lendio: Best For Loan Variety

Lendio

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Read our Review

Total Rating 4.8
Rates & Fees5.0

Services5.0

Eligibility Requirements4.9

Application4.5

Sales & Advertising Transparency4.4

Customer Service4.9

User Reviews4.9



Pros

  • Many types of business financing available
  • Lines of credit up to $250,000
  • Relatively low credit score requirements

Cons

  • Rates can be high
  • Funds can take a while to disburse
  • The application process can be slow

Why Lendio Is Great For Loan Variety

Like BusinessLoans.com, Lendio is a business loan marketplace and not a direct lender. Submit a single loan application to Lendio, and you'll get a range of loan offers from Lendio's extensive lender network.

What sets Lendio apart is the sheer number of loan products on offer. If you're facing credit challenges, you'll likely still get offers for lines of credit, as well as offers for other types of lending products appropriate to your business situation.

Lendio Services

Lendio matches applicants to the following loan offers:

  • Lines of credit
  • Short-term loans
  • Term loans
  • SBA loans
  • Merchant cash advances
  • Equipment financing

Lendio Rates & Fees

With Lendio, your rates and fees depend entirely on the lender and loan offer you ultimately accept. However, Lendio does provide the following details regarding the line of credit offers you’re likely to receive:

  • Lending amount: $1,000 to $250,000
  • Time to funding: 1-2 days
  • Loan terms: 6-18 months
  • Interest rate: 8-60%

Lendio Eligibility Requirements

Lendio recommends that applicants meet the following requirements before applying for a line of credit:

  • Credit score: 600+
  • Annual revenue: $50K+
  • Time in business: 6 months or more

Note that you can still apply for a line of credit through Lendio with a credit score under 600. However, Lendio states that “it may be more challenging to receive funding from our lending partners” if you don’t meet “some” of the above qualifiers.

When To Use Lendio

  • You want to receive line of credit offers from among a vast lender network
  • You want the chance to apply for as many business loan types as possible

Get Started With Lendio

Read our in-depth review

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Headway Capital: Best For Smaller Lines Of Credit

Headway Capital

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Pros

  • Relaxed eligibility requirements
  • Fast funding available
  • Quick, easy application process

Cons

  • Loans unavailable in a few states
  • Smaller maximum lending amount than many other lenders
  • A draw fee of 2% applies in most states

Why Headway Capital Is Great For Smaller Lines Of Credit

Headway Capital specializes in providing lines of credit to businesses that might struggle to find funding elsewhere, whether due to credit challenges or the lack of a lengthy business history. It doesn't provide LOCs to borrowers in every US state, but most states are within Headway Capital's service area.

Headway Capital offers LOCs of up to $100,000.

Headway Capital Services

Headway Capital only offers business lines of credit.

Headway Capital Rates & Fees

Headway Capital doesn’t specify an APR range for its lines of credit, though it does indicate that interest rates start at 3.3% and that in most states, draws from your line of credit are subject to a 2% draw fee.

Here’s what else Headway Capital discloses about its lines of credit:

  • Lending amount: $5,000 to $100,000
  • Time to funding: Next business day after approval
  • Loan terms: 12, 18, or 24 months
  • Repayment frequency: Weekly or monthly

Headway Capital Eligibility Requirements

Headway Capital posts the following eligibility requirements for its lines of credit:

  • Annual revenue: $50K+
  • Time in business: One year (Headway Capital’s FAQ states that it requires only 6 months in business, but its main loans page states that the requirement is one year)

Headway Capital doesn’t specify a minimum credit score requirement on its website, but other sources indicate that it requires a FICO score of 560+.

When To Use Headway Capital

  • You want a line of credit of $100K or less from a lender with relaxed eligibility requirements
  • You’d rather work with a single lender and not a loan aggregator

Get Started With Headway Capital

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National Business Capital: Best For Higher Credit Lines

National Business Capital

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Read our Review

Total Rating 4.2
Rates & Fees4.0

Services3.5

Eligibility Requirements4.3

Application4.5

Sales & Advertising Transparency4.4

Customer Service4.7

User Reviews4.9



Pros

  • High lending amounts
  • No minimum credit score requirement
  • Fast funding available

Cons

  • Rates may be high
  • High annual revenue requirements
  • Nontransparent costs

Why National Business Capital Is Great For Higher Borrowing Amounts

Like Lendio and BusinessLoans.com, National Business Capital is a loan aggregator, not a direct lender. With National Business Capital, you can get a line of credit of up to $10 million.

National Business Capital has over 75 lenders in its lender network and will work to match you with a line of credit or other loan type when you apply, provided you meet a few business benchmarks.

National Business Capital Services

National Business Capital offers the following business loan types from its partner lenders:

  • Lines of credit
  • Short-term loans
  • Term loans
  • SBA loans
  • Merchant cash advances
  • Equipment financing

National Business Capital Rates & Fees

National Business Capital doesn’t provide any information regarding the rates and fees associated with the lines of credit of its partner lenders. Your interest rate and any fees will vary depending on the lender you get matched with.

National Business Capital does state that its lines of credit range from $100,000 to $10 million and that your time to funding will be 24 to 48 hours.

National Business Capital Eligibility Requirements

National Business Capital does not set or recommend a minimum FICO score to line of credit applicants.

Your business must meet the following qualifications, however:

  • Annual revenue: $500K+
  • Time in business: 1 year

When To Use National Business Capital

  • You want a line of credit of up to $10 million and you meet National Business Capital’s high revenue requirements
  • You want to receive line of credit offers from a variety of lenders but your FICO score is poor

Get Started With National Business Capital

Read our in-depth review

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Loan Marketplace Review Methodology

We spend hours researching and evaluating each business loan marketplace we review at Merchant Maverick, placing special emphasis on key characteristics to generate our ratings.

When rating lending marketplaces, we use a 39-point rubric that looks at rates and fees, services, eligibility requirements, application, sales and advertising transparency, customer service, and user reviews. We weigh each section differently to calculate the total star rating.

  • Rates & Fees: 15% of the total star rating
  • Services: 30% of the total star rating
  • Eligibility Requirements: 15% of the total star rating
  • Application: 15% of the total star rating
  • Sales & Advertising Transparency: 10% of the total star rating
  • Customer Support: 10% of the total star rating
  • User Reviews: 5% of the total star rating

Each section is further broken down into granular, weighted subsections, in which we examine specific attributes like the variety of lending products and partners available, terms lengths, conditions of repayment, credit score and revenue requirements, ease of application, length of time to funding, the ethics involved in promoting the loan marketplace.

Read more about how we rate loan marketplaces.

An Alternative To Bad Credit Business Lines Of Credit: Business Credit Cards

If you find that your low credit score is preventing you from getting a business line of credit that doesn’t involve exorbitant fees, a business credit card provides a similar funding mechanism and may be the right choice for you.

A business credit card gives you instant access to funding without waiting for transfers, and you can withdraw cash if needed. Not only will you be able to use your funds immediately, but business credit cards for users with bad credit can also help you boost your credit score, which will come in handy should you apply for other types of financing in the future.

Let’s discuss two business credit cards that can be obtained by business owners with poor credit.

Capital One Spark Classic

Capital One Spark 1% Classic


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Annual Fee:

$0

 

Purchase APR:

30.74% (variable)

Required Credit: Fair

Welcome Offer: None

Intro Purchase APR: N/A

Intro Balance Transfer APR: N/A

Foreign Transaction Fee: None

Rewards:
  • Unlimited 1% cash back
Featured Benefit:
  • Zero fraud liability if your card is lost or stolen. Plus, get automatic fraud alerts via text, email, or phone call.
More card details (click to expand)
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The Spark® Classic from Capital One® is a popular choice with business owners that have lower credit scores. Applicants are recommended to have a credit score of at least 580 to qualify. This is an unsecured credit card, and it carries no annual fee.

One of the advantages of this card is that it offers 1% cash back for every business purchase. Rewards are unlimited, and there is no minimum to redeem. The Capital One Spark Classic comes with fraud coverage and free employee cards. Using the card responsibly can also help you boost your credit while giving you access to the capital that you need.

Revenued Business Card

Revenued Business Card

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Read our Review

The Revenued Business Card is meant to resemble a business credit card, but it’s actually a prepaid Visa spending card that gives you a credit line that is based on your business’s projected future revenue — an arrangement that resembles invoice factoring. It’s an unusual card, but this unique model means that Revenued can offer this card without requiring a credit check or a personal guarantee.

Revenued offers an outstanding 3% cash back on all your business purchases. However, though Revenued doesn’t care about your credit score, it does require at least six months of business history, an average daily balance of $1K+ in your business bank account, and at least $10K in monthly revenue.

FAQs About Business Lines Of Credit For Bad Credit

Do I need to sign a personal guarantee to get a line of credit?

Most line of credit providers will require a personal guarantee to get a line of credit. You may be able to avoid signing a personal guarantee by putting up specific collateral.

Does my personal credit score affect the business credit score?

No, personal credit scores do not affect business credit scores.

What is a better option for bad credit? Business line of credit or credit cards?

The best option depends on your financial goals. If you want to improve your credit score, a business credit card is a better option. If you need a credit line to improve cash flow, a business line of credit is a generally a better choice.

Is there an option to restructure the repayment period in line of credit for bad credit?

Some lenders will allow you to restructure your repayment period, whereas others will not. If you think you might need to restructure your repayment period down the line, ask potential line of credit providers about their restructuring policies before you open a credit line.

Which Bad Credit Business Line Of Credit Is Right For Your Business?

Having a low credit score can make qualifying for a business loan difficult, but not impossible. A business line of credit can help borrowers facing credit challenges fund and build their businesses.

By applying for the right line of credit and using it responsibly, you will not only keep your business operating smoothly but can also build your credit in the meantime to qualify for more financing options in the future.

Plus, if you can’t find a line of credit that meets your needs, business credit cards are available to borrowers with bad credit and provide a similar revolving credit line that can benefit your business. You can even start with a secured business credit card and graduate to one of the best business credit cards once your credit situation improves.

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Jason Vissers

Jason Vissers

Senior Staff Writer at Merchant Maverick
Jason has been writing about small business software platforms, services, and financing since 2015. Jason’s expertise has been featured in Yahoo Finance, Time/NextAdvisor, Home Business Magazine, CreditCards.com, GoBankingRates, TheLadders.com, and other publications. He has a bachelor’s degree in Political Science from San Diego State University and currently lives in Philadelphia, Pennsylvania.
Jason Vissers
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Sources

  1. BusinessLoans.com (Accessed 01/29/2024)
  2. Lendio (Accessed 01/29/2024)
  3. Headway Capital (Accessed 01/29/2024)
  4. National Business Capital (Accessed 01/29/2024)
  5. Capital One Spark Classic (Accessed 01/29/2024)
  6. Revenued (Accessed 01/29/2024)
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