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Best lines of credit for bad credit in 2026
The best line of credit for bad credit is a secured one: a line backed by receivables or a home equity line, where collateral offsets the score. Some online lenders offer small unsecured lines to fair-credit businesses with strong revenue. If neither is available, invoice factoring provides revolving access to cash without a credit-based approval.
By the WithFunded team · Published November 11, 2026 · Rates as of November 2026
The short list
- Best with receivables or inventory
- Asset-based line of credit
- Best for fair credit with strong revenue
- Business line of credit
- Best revolving alternative
- Invoice factoring
- Best rate if you have home equity
- Home equity line of credit
The 4 best options, ranked
1. Asset-based line of credit Best with receivables or inventory
A lender advancing against collectible invoices cares more about them than about your credit history.
Watch for: Expect regular reporting on receivables and inventory, and a limit that moves with them. Business line of credit guide →
2. Business line of credit Best for fair credit with strong revenue
Online lenders weigh deposits heavily. A business with solid sales and a low-600s score may get a modest line at a higher rate.
Watch for: Some lenders add draw or maintenance fees, and a limit can be cut at renewal. Business line of credit guide →
3. Invoice factoring Best revolving alternative
Factoring behaves like a line that grows with sales and is approved on your customers' credit.
Watch for: Your customers pay the factor directly, and with recourse factoring you still carry non-payment risk. Invoice factoring guide →
4. Home equity line of credit Best rate if you have home equity
A home equity line is based on equity and personal credit. A weak score may limit it, but equity counts for a lot.
Watch for: Your home is the collateral, even though the money funds the business. HELOC guide →
Side-by-side comparison
| Option | Verdict | Cost basis | Funding speed | Qualifies on |
|---|---|---|---|---|
| Asset-based line of credit | Best with receivables or inventory | Interest on what you draw; the limit follows a borrowing base of receivables and inventory | Weeks to set up | The quality of your receivables and inventory |
| Business line of credit | Best for fair credit with strong revenue | Representative 8%–30% APR, charged only on what you draw | Often days | Revenue, time in business, and credit |
| Invoice factoring | Best revolving alternative | A factoring fee on invoice value, not an APR | Days | Your customers' creditworthiness more than your own |
| Home equity line of credit | Best rate if you have home equity | Typically prime (7.00%) plus a lender margin | Slower than unsecured options: expect an appraisal and title work | Your home equity and personal credit |
What it costs
A line of credit charges interest only on the balance you have drawn. This is the monthly interest on a carried draw, before any principal is repaid:
| Carried draw | At 8% APR | At 19% APR | At 30% APR |
|---|---|---|---|
| $10,000 | $67 | $158 | $250 |
| $30,000 | $200 | $475 | $750 |
| $75,000 | $500 | $1,188 | $1,875 |
Interest-only illustration across the representative band. Draw fees and repayment schedules vary by lender. WithFunded calculation.
Factoring is priced as a fee on the invoice, not an APR. You get an advance up front, then the balance minus the fee once your customer pays. At an illustrative 85% advance and 3% fee:
| Invoice value | Advance up front | Factoring fee | You receive in total |
|---|---|---|---|
| $10,000 | $8,500 | $300 | $9,700 |
| $30,000 | $25,500 | $900 | $29,100 |
| $75,000 | $63,750 | $2,250 | $72,750 |
Illustrative advance rate and fee. Actual terms depend on your invoice volume, your customers, and how long they take to pay. WithFunded calculation.
What lenders look at
- Collateral: receivables, inventory, or real estate.
- Monthly revenue and average bank balance.
- Whether credit problems are recent or resolved.
Mistakes to avoid
- Products marketed as a line of credit that are really advances with daily payments. Read how repayment works.
- Maxing out a new small line, which signals distress and can get it frozen.
Frequently asked questions
- Can I get a business line of credit with bad credit?
- It is difficult unsecured. Secured lines, factoring, and lenders that emphasize revenue are the realistic routes.
- What credit score is needed for a business line of credit?
- It varies. Many online lenders look for scores in the 600s. Secured lines and factoring are more flexible.
- How can I qualify for a better line later?
- Use a small facility responsibly, pay on time, reduce personal card balances, and reapply after six to twelve months of clean history.
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How we ranked these options
This guide ranks types of financing, not individual lenders. Each option is ordered by how well it fits the need described on this page, judged on four things in this order: whether the structure matches how the money will be used and repaid, total cost, funding speed, and how hard it is to qualify. Cost figures are WithFunded calculations from published rate inputs as of November 2026: the bank prime loan rate from the Federal Reserve, the SBA maximum-rate schedule, and Federal Reserve survey data. The method follows our 2026 SMB Financing Cost Report, whose own figures use June 2026 rates.
WithFunded is a financing marketplace, not a lender. Our 2-minute form suggests a product type from the families we cover, and a funding partner reviews the request. Not every structure named in this guide is available through WithFunded: options such as SBA microloans, USDA farm loans, bank loans, and seller financing are ones you would pursue directly with the provider. They are listed because leaving out a good fit would make the ranking less useful.
Related guides
The top-ranked option on this page is asset-based line of credit because it fits the most common version of this need. Your own best fit depends on your revenue, time in business, credit, and how fast you need the money.
Disclaimer. WithFunded and Big Think Capital are a financing marketplace; we are not the direct lender and do not guarantee funding, approval, rates, or terms. Everything on this page is a representative example only — not an offer or a commitment to lend, and not financial advice. Actual rates, fees, payments, and terms are set by the funding lender and depend on your business, credit, and the product. Where required by state law, the lender provides cost-of-financing disclosures before any agreement is signed.