Accessing the right funding for your business with a shaky credit score isn’t always easy—especially if you’re interested in a business line of credit. But it’s not an impossible task either. Plenty of successful business owners start out with bad credit and still manage to qualify for financing options (business credit lines included) that help their companies grow, solve cash flow problems, and create momentum to move forward. 

The trick is to understand how lenders view risk and show them a full picture of your company’s strength (not just your credit score). Of course, credit history and credit scores matter. But lenders consider other details, too. Lenders weigh factors like your company’s annual revenue, cash flow, and time in business before deciding whether to approve your application. So, you may still be able to secure funding if you know how to position your business, document its performance, and choose the right lender and financing solution.

In this guide, learn how to get a business line of credit for bad credit and what to expect from lenders in the process. You’ll also find tips on how to strengthen your application before you apply, how to compare financing options, and how to build and manage good business credit after you open a new business credit line.

What “bad credit” means for your business.

Lenders usually define “bad credit” using your personal credit score, especially for small businesses and startups that lack well-established business credit history. FICO® Scores below 580 typically fall into the poor credit range, while most lenders consider scores between 580-669 to be fair. Any score below 600 may cause traditional banks to hesitate. But some alternative and online lenders might still approve funding if your cash flow is strong.

5 steps to get a business line of credit with bad credit.

In ideal circumstances, it’s wise to improve your credit before you apply for financing. But if you’re searching for a new business line of credit with bad credit, the following steps may help.

1. Review your credit.

Before you apply for a new business credit line (or any other small business loan), find out where your credit stands. Although no-credit-check loans exist, they’re rare. Most lenders will review your credit when you apply for a new business line of credit or business loan. So, check your credit first to avoid surprises. 

Consider reviewing all three of your personal credit reports and scores from Equifax, TransUnion, and Experian. Checking your business credit reports and scores (if you have established business credit) can be smart, too. Understand your credit score range and how it might impact your financing options. Also, look over your credit reports for any potential errors. Remember, if you discover incorrect information on a credit report, you can dispute those items with the appropriate credit reporting agency.

2. Find the right lender.

Traditional banks often cater to borrowers with higher credit scores, more time in business, and those seeking larger loan amounts. But if you have fair or bad credit (e.g., a FICO Score under 600), you’ll often have more success with online lenders or fintech companies that use revenue-based underwriting. 

After checking your credit, review the minimum requirements for a business line of credit of different lenders to help narrow down your choices. Although the credit score a lender accesses may not be identical to the one you check yourself online, it can still be a useful tool during the initial loan shopping process.

3. Prove financial stability.

Even with bad credit, steady cash flow could strengthen your financing application. Gather the last six months of business bank statements, merchant processor reports, and accounts receivable summaries. When lenders see that your business consistently generates enough income to handle its repayment terms, they may be more comfortable lending your company money. 

4. Borrow strategically.

Applying for large amounts of business capital can be tricky. Yet if you seek a realistic credit limit to meet your company’s financial goals, it could increase your approval odds.

You can use Lendio’s business line of credit calculator to estimate the amount of money your company can afford to comfortably borrow and repay. The online tool can also help you estimate monthly payment amounts and predict the credit limit your business might be eligible for on a new credit line. 

5. Consider secured financing.

If your credit score is low, applying for a secured business line of credit might be worth considering. With this option, you back your company’s credit line with collateral such as inventory, equipment, or real estate. When you pledge collateral, there’s less risk for the lender, and your chances of qualifying may improve along with the pricing and terms of your offer.

Typical credit score minimums and lender expectations.

Many online lenders accept personal credit scores as low as 600, and some may work with applicants who have scores as low as 550. Traditional banks, by comparison, sometimes require minimum FICO Scores as high as 700 and at least two years in business.

On a positive note, the Federal Reserve’s Small Business Credit Survey showed that companies with medium or high credit risk still saw approval rates around 50% for loans and lines of credit (even with less-than-perfect credit scores). So, it’s important to remember that credit isn’t the only determining factor lenders consider when you apply for business financing. 

Strong cash flow, proper documentation, and realistic borrowing terms could improve your chances of approval. When you do a good job presenting your company’s performance, show an ability to repay, and match your credit limit request to your actual business needs, you’re more likely to join the half of applicants who are successful despite credit score weakness. 

Navigating minimum credit score requirements and alternatives.

It’s true that borrowing money for your business tends to be more difficult when you have bad credit. However, there’s no such thing as a universal minimum credit score when it comes to qualifying for a business line of credit. Credit score cutoffs vary by lender and can change over time. If you’re looking for guidance, below are some general guidelines that may make it easier to shop for funding options.

Lender type Typical minimum credit score Common requirements
Traditional banks and credit unions 680-700 2+ years in business, collateral, strong financials
Credit unions 650+ Membership, steady deposits, relationship history
Online lenders and fintechs 600+ Strong revenue, 6+ months in business
Alternative lenders 550+ Daily or weekly repayments, higher APRs

Some lenders may also weigh factors like your annual revenue, time in business, profit margins, and payment history as heavily (or sometimes more heavily) than your actual credit score.

Line of credit financing options for bad credit.

A business line of credit can be one of the most flexible financing tools available to small business owners. But if you’re dealing with bad credit, you may need to get creative when it comes to exploring funding sources. On a positive note, some lenders work with borrowers who have less-than-perfect credit and use factors like cash flow, annual revenue, and more (not just credit scores) to make approval decisions.

Lenders open to bad-credit borrowers.

While approval criteria can vary, several online lenders in the Lendio marketplace work with entrepreneurs who are rebuilding their credit. The following options highlight a mix of business lines of credit that might work for borrowers with bad credit, fair credit, along with different business profiles and funding needs.

DISCLAIMER: The figures, rates, and terms (including APRs and minimum credit scores) presented here are estimates and general guidelines only. They are not guaranteed offers of credit and are for informational purposes. Your actual eligibility, final interest rate, and terms will depend on a comprehensive review of your business's financial profile, cash flow, time in business, and credit history by the individual lender.

Lender Loan type Minimum credit score Financing amount Time to funding
Rapid Finance Line of credit 620 $5,000-$600,000 Same Day
OnDeck Line of credit 600 $6,000-$100,000 Same Day
Idea Financial Line of credit 650 $10,000-$275,000 Same Day
Headway Capital Line of credit 600 $5,000-$100,000 Same Day
Fundbox Line of credit 600 Up to $150,000 Same Day

Alternative financing solutions.

If a revolving credit line isn’t the right fit for your business, there are other funding options you can also consider. Even with bad credit, some of the solutions below might help your business bridge short-term capital gaps or fund upcoming projects while you work to establish or rebuild better credit over time.

  • Short-term lines of credit: This type of business credit line typically features a smaller credit limit and shorter repayment terms. Interest rates also tend to be higher, but the approval process can be easier as well—a potential relief if you’re struggling with credit challenges. Short-term credit lines can be useful for covering day-to-day expenses or short term projects, and they might also help you build business credit for the future if you manage the account responsibly. 
  • SBA Microloans: An SBA Microloan is a special type of loan backed by the Small Business Administration (SBA). Eligible borrowers can finance up to $50,000, but the average loan amount is $13,000. Good credit is helpful, but not a requirement to borrow. However, it is important to demonstrate a solid business plan and community impact to qualify for funding. 
  • Revenue-based financing: This type of funding offers your business fast access to cash by letting you borrow against money your company will earn in the future. It’s not technically a loan, but a type of advance against future sales or invoices. Typically, your business must repay through fixed daily, weekly, or bi-weekly payments. In addition to the rapid repayment structure, revenue-based financing can be expensive—especially if you have poor credit. 

Comparing secured vs. unsecured lines of credit.

If you decide a business line of credit for bad credit is the best path for your company, compare secured credit lines vs. unsecured credit lines before you fill out an official financing application. Both financing options have their advantages and disadvantages. The table below provides a side-by-side overview of their key differences. 

Type Collateral required? Typical APR range Personal guarantee
Secured line of credit Yes (equipment, inventory, property, etc.) 7-20% Often required, but not always
Unsecured line of credit No 10-35% Usually requires a personal guarantee.

Each type of credit line can work for different goals. The key is to compare the features and figure out which option makes the most sense for your business.

Strategies to strengthen your application and increase approval odds.

Trying to open a new business line of credit (or any other type of business loan) when you have bad credit can be stressful. Yet there are steps you can take to try to improve your chances of approval now while you work on building better credit for the future. 

1. Show consistent cash flow. Good cash flow with regular deposit history and steady revenue streams can work in your favor when you apply for credit. These actions may help demonstrate financial stability and an ability to handle new debt. 

2. Organize financial documentation. Keep your financial records in order. Maintain clean profit-and-loss statements, balance sheets, tax returns, and bank statements so you’ll have everything you need for your next financing application.

‍3. Provide a detailed repayment plan. Spell out how much you plan to draw, how you’ll use the money you borrow, and when you’ll repay based on your cash flow timing. Include best and worst case projections and contingency plans. Depending on the lender, providing this document along with your application might tip the scales in your favor when you apply for a new credit line.

4. Offer collateral or a co-signer. Collateral reduces a lender’s risk when you apply for a business line of credit. A co-signer with good credit could help accomplish the same goal (though that co-signer would be accepting significant risk instead).

5. Pay existing debts on time. A history of on-time payments builds trust and could help improve your credit score over time.

‍6. Compare offers. Shop around to make sure you find the best offer available. The Lendio marketplace can help you compare financing offers without unnecessary hard credit inquiries.

Managing and building credit after opening a business line of credit.

Opening a new business line of credit with bad credit can be a major win. But your next steps matter just as much. Here’s how to manage your new credit line to build good business credit. 

  • Pay on time, every time. Better yet, make a habit of paying your bill early each month. (Some business credit scoring models actually reward you for early payments.) A single missed payment has the potential to lower your business and personal credit scores. And late payments could remain on your credit reports for up to seven years. 
  • Use revolving credit strategically. Borrow only what your business can afford to repay within its repayment terms (ideally by the due date on your next statement).
  • Monitor your credit. Keep an eye on your business and personal credit reports on a regular basis. Watch for signs of fraud, errors, or negative activity. ‍
  • Plan to refinance. Make a plan to refinance your business line of credit in the future once your credit improves. Doing so has the potential to save you a bundle on interest rates and fees.

Final thoughts.

Bad credit doesn’t have to shut the door on your financing goals. Many small business owners find ways to open business lines of credit despite past setbacks by finding the right lender and  highlighting other strengths like reliable revenue and collateral.

If you need to seek financing while you still have bad credit, treat this phase like a rebuild instead of a roadblock. Get the working capital you need now, then aim to stack early payments and other good credit management habits to put yourself in a better position to refinance later. When you show lenders how your business runs (not just what your credit score says), you have a better chance of turning a bad credit chapter into a better rate, and a stronger company in the long run.