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Headway Capital Line of Credit: 2024 Review

Headway offers a fast and flexible business line of credit — but rates are higher than bank loans.
By Randa Kriss
Last updated on February 1, 2024
Edited bySally Lauckner
Fact checked and reviewed

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Our Take

The bottom line:

Headway Capital’s fast line of credit can be a good option for startups and borrowers with fair or bad credit.
Full review

Headway Capital - Line of credit

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Pros & Cons

Pros

  • Flexible qualification requirements.
  • No prepayment penalties.
  • Funds available by next business day after approval.

Cons

  • Most borrowers are subject to a 2% draw fee.
  • Not available in all U.S. states.

Full Review

Headway Capital is an online lender that issues business lines of credit. The company is known for its fast funding process and flexible qualification requirements.

Headway Capital is best for borrowers who:

  • Need fast cash. You can complete Headway’s simple and straightforward application and find out if you qualify for a credit line in just minutes. After you’ve been approved, you can receive funds as quickly as the next business day.
  • Have newer businesses. Headway only requires a minimum of
    6
    months in business and $50,000 in annual revenue (about $4,167 per month) for you to qualify. In addition, the lender does not require you to secure your financing with physical collateral, making this credit line well suited for startups that have limited assets.
  • Have fair or bad credit. Headway considers several factors when underwriting your loan application, not just your credit score. You’ll only need a minimum personal credit score of
    625
    to qualify.

Headway Capital line of credit features

Headway Capital offers a flexible, revolving business line of credit.
Like most credit lines, you can use Headway’s line of credit for a variety of purposes, drawing funds as you need them. You only pay interest on the funds you draw. Once you’ve paid back the money you’ve borrowed, you can continue to draw on the line.
Here’s what you need to know about this product:
Credit line amount
$5,000 to $100,000.
Estimated APR range
35
% to
80
%.
Fees
2% draw fee applicable in most states. A draw fee is charged each time you take funds from your credit line.
Terms
12, 18 or 24 months.
Repayment schedule
Weekly or monthly.
Funding speed
Funds available within one business day of approval.

Headway Capital requirements

To qualify for a Headway Capital line of credit, you’ll need to meet the following requirements:
  • Minimum credit score:
    625
    .
  • Minimum time in business:
    6
    months.
  • Minimum annual revenue: $50,000.
You will also need a business bank account. If you’ve been operating for less than one year, you’ll be asked to provide six months of business bank statements.
Headway Capital will require you to sign a personal guarantee. The lender will only take out a Uniform Commercial Code (UCC) lien on your business, however, if you miss payments and your account goes into default.
Headway Capital does not provide financing to businesses in the following states: Arkansas, Connecticut, Montana, Michigan, North Dakota, Nevada, Rhode Island, South Dakota and Vermont.

Where Headway Capital stands out

Fast access to funds

With Headway Capital’s line of credit, you can get fast access to working capital. You can submit an initial application in just minutes by providing basic information about yourself and your business.
If you’re eligible, you’ll receive a pre-qualification offer. This offer will allow you to choose your repayment term and initial draw amount. Then, you’ll be prompted to sign a business loan agreement and provide business bank statements.
After you’re approved, the initial draw amount will be deposited into your bank account and you can pull from the funds immediately. It typically takes one business day to receive your funds.

Easy to qualify

Compared with more traditional business loan options, Headway offers flexible qualification requirements, especially for new businesses and borrowers with bad credit.
Whereas a bank may require a minimum credit score close to 700 and two years in business, you’ll only need a credit score of
625
and
6
months in business to qualify for Headway’s line of credit. The lender also doesn’t require you to secure your credit line with physical collateral, which may be appealing to businesses with limited assets.

Limited fees

Although businesses in certain states will be subject to a 2% draw fee, Headway Capital doesn’t charge any other extraneous fees. The lender does not charge a monthly or annual maintenance fee, an origination fee or an inactivity fee.
You can also repay your outstanding balance at any time without incurring a prepayment penalty.

Where Headway Capital falls short

Low borrowing maximum

If you’re looking for a large credit limit, you may want to consider alternative options, as Headway only offers lines of credit up to $100,000. Some competitors, like American Express and Bluevine, can provide higher maximums — up to $250,000.

Can’t build business credit

Headway Capital does not report your payment history to the commercial credit bureaus. While this means that you can’t hurt your business credit score using a Headway line of credit, it also means you can’t build business credit either.
Building business credit can be particularly important for newer companies, as doing so can help them qualify for larger loan amounts, more competitive interest rates and longer repayment terms in the future.
Although online lenders may be less likely to report to the commercial credit bureaus compared with bank lenders, some companies, like OnDeck, can help you build business credit.

Alternatives to Headway Capital

Fundbox

If you have a slightly lower credit score or want to avoid a draw fee, Fundbox may be worth considering as an alternative to Headway Capital.
Fundbox offers a business line of credit in amounts up to $150,000. Annual percentage rates can range from approximately
36
% to
99
% — a bit higher than Headway — but Fundbox does not charge a draw fee. Repayment is required on a weekly basis, with 12- or 24-week terms.
To qualify for a Fundbox line of credit, you’ll need a minimum credit score of
600
, at least
6
months in business and a minimum annual revenue of $100,000.

SBA microloans

SBA microloans offer competitive interest rates for borrowers who may not qualify for other traditional loan options.
SBA microloans are available in amounts up to $50,000 with repayment terms as long as seven years. Interest rates typically range from
8
% to
13
%, significantly lower than Headway Capital offers. Although these are term loans — and not lines of credit — they can provide funding for a variety of working capital needs.
Unlike other types of SBA loans, SBA microloans are targeted toward traditionally underserved businesses, including startups and those with bad or limited credit. Specific requirements will vary based on the microlender, but you may be able to qualify with a minimum credit score of
620
and less than two years in business.

Find the right business loan

The best business loan is generally the one with the lowest rates and most ideal terms. But other factors — like time to fund and your business’s qualifications — can help determine which option you should choose. NerdWallet recommends comparing small-business loans to find the right fit for your business.

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Methodology

NerdWallet’s review process evaluates and rates small-business loan products from both traditional and online lenders. We collect over 30 data points on each lender using company websites and public documents. We may also go through a lender’s initial application flow and reach out to company representatives. NerdWallet writers and editors conduct a full fact check and update annually, but also make updates throughout the year as necessary.
Our star ratings formula takes into account features we consider to be small-business friendly, including: transparency of rates and terms, flexible payment options, fast funding times, accessible customer service, reporting of payments to business credit bureaus and responsible lending practices.
We weigh these factors based on our assessment of which are the most important to small-business owners and how meaningfully they impact borrowers’ experiences.

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