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Don’t Let Bad Credit Stop You From Getting A Startup Loan

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Shannon Vissers

Shannon Vissers

Shannon is a writer and editor based in San Diego, CA. Shannon attended San Diego State University, graduating in 2005 with a BA in English. She is the former editor-in-chief of SteelOrbis, an online trade publication. Shannon has also published articles for LIVESTRONG.COM, eHow, Life'd, and other websites. She has been with Merchant Maverick since 2015, writing about POS software, small business loans, and financing for women entrepreneurs.
Shannon Vissers
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38 Comments

Responses are not provided or commissioned by the vendor or bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by the vendor or bank advertiser. It is not the vendor or bank advertiser's responsibility to ensure all posts and/or questions are answered.

    Tab Pierce

    I have an 8+ year old services firm. We’ve had a bit of hard luck over the past three years, but have pretty much pulled ourselives up and out through much difficulty. We’re now sitting on a six month SOW/PO of $840,000. However, that means we have to hire four new people and we don’t have the capital to bridge invoice payments. We’ve looked at one more traditional loan and it didn’t work. We’ve considered factoring, but the timing appears to be off. We don’t want to turn to a hard money lender because of the rates. However, based on my personal credit history and things with the business we’re havign a tough time connecting the dots. Any suggestions on how to receive funding, even for six months or so, without giving up a first born child?

      Shannon Vissers

      Hi there! Depending on your credit score, you might be eligible for any of the loans mentioned in this article, or any of the loans from our SMB lender comparison chart. You can usually prequalify and see what rates they might offer you without it dinging your credit score. However, a few of those options, including Lendio and Fundation, could get you as much funding as you need.

      You might also be eligible for an SBA loan (if you haven’t already looked into that). SmartBiz is another online lending service for established businesses like yours, which helps you apply for an SBA loan. It might also be worth it for you to look into some more invoice factor options, even though the ones you already checked wouldn’t work for you.

        Greg Bonkowski

        It says business start up loans, but to qualify you have to be in business for at least a few month and draw revenue. Doesn’t make sense, does it?

          Shannon Vissers

          By most definitions, a startup means 6 or fewer months in business. So, a 6-month old business can still be considered in the startup phase. You will be hard-pressed to find a bank or online lender willing to extend a loan to someone who hasn’t made any money from their business yet. If this is the case, you could try taking out a personal loan. And some online lenders like Fundbox only require 3 months in business.

            Esther Taylor

            Hi. I’ve had my business for about a year. It’s solely on-line. However, I want to move into an actual brick and mortar store. I’m trying to get some help with funding on acquiring my stock for the store as well as help with the deposit for the location. I could make this possible with about $3000.00.Any suggestions?

              Jessica Dinsmore

              Hi Esther!

              We’ve broken down all of our recommended lenders by type of financing, as well as credit score and time in business to make it easy for you to narrow down your options. We also have revenue requirements listed. I’d definitely suggest taking another look and reaching out to those that seem like a suitable match. We’ve spent a lot of time researching these lenders for you, so you can trust you’ll be in good hands with whoever you choose. Best of luck with your move!

                Darian Taylor Jr

                HI my name is Darian Taylor Im looking for a Business loan up to $30,000. I thought of a New ashtray system that goes in your vehicle that also eliminates odors in your car for every one who’s in the car who doesn’t like Cigarettes like me. I hate cigs I grew up with all kinds of family and friends who like it but me no I’m the total opposite that’s why i thought of this Idea. I have so many blueprints on and it how it would work. It could be a multimillion dollar business and its good for people who likes cigs and for people who live with other people who smoke cigs! What’s the best start up loan place cause if i could get help from them i can give them double the amount. Thats how good my Idea is….

                  This comment refers to an earlier version of this post and may be outdated.

                  Jessica Dinsmore

                  Hi Darian,
                  We’ve named ten great startup lenders in this article that should be able to help you. But if you want to check out other types of loans available, this article might help. Good luck!

                    This comment refers to an earlier version of this post and may be outdated.

                    George Davis

                    My credit score is in the low 500s and I need about $20,000 for the start up cost of everything I’ll need to get it going. I currently make around $11,000 monthly but I need to lease an actual location for my massage company. I would have around $2,000 to put down for any loan. Any ideas on what might work for me?

                      This comment refers to an earlier version of this post and may be outdated.

                      Shannon Vissers

                      Hi there! If you have officially been in business for at least six months, you could almost qualify for Credibly—but you’d have to get your business revenue up to $15K a month. You might also qualify for a loan from Accion, though you might need to improve your credit score to at least 575. Check their website to see the requirements and loan options in your state. Avant is another possibility if you can get your score up to 600. Hope it helps!

                        This comment refers to an earlier version of this post and may be outdated.

                        Scott

                        I’m a certified life coach wanting to jumpstart my coaching and public speaking business, I have very little disposable income and a credit score below 550. Are there any options available to me?

                          This comment refers to an earlier version of this post and may be outdated.

                          Shannon Vissers

                          Hi Scott! You do have options with bad credit, but whether you’re eligible will depend on your income level. Lenders want to see that you have enough money to make payments on your loan—daily or weekly repayments on your loan will start as soon as you receive the money. Credibly, for example, will accept scores as low as 500, but they’ll want to see that you make $15K/month. You might also have to pay a lot of interest if you have bad credit, so that’s something else to keep in mind.

                            This comment refers to an earlier version of this post and may be outdated.

                            Tambrey

                            my husband and I have a small wellness centre (massage therapy, wellness products) in a rural community in NW Iowa. We basically have no credit, other than medical bills that have brought our scores way down…house paid for, vehicle paid for, no credit cards…
                            Small business with maybe $2000 income at the moment (single therapist, soon to be me and my husband part time)…so trying to find a lender who will loan is even $15,000 is difficult, because we do not have a minimum revenue of $15,000 a month or big deposits in our checking account.
                            All we have built up so far has been done with our own saved money and turning what we make at the business back into it.
                            What are options for a small but growing business, who could take that $15,000 and potentially turn it into an additional $30,000 in revenue within the first year. We have our business plan, and the upgrades we want to incorporate will bring in extra revenue easily, with little additional effort on our part.
                            Spa treatments within our scope of massage license, Sauna room, yoga and dance, herbal store….we just need to find the opportunity of someone taking the chance with us…somewhere

                              This comment refers to an earlier version of this post and may be outdated.

                              Shannon Vissers

                              Hi there! It’s difficult if your income and credit score are both low. The lenders that accept bad credit tend to have higher income requirements. Business lenders will want to see that you have sufficient income to repay the loan, because loan repayments can be quite large and are taken from your account on a weekly or even daily basis. For a short-term loan of even just $15K, you’d likely be paying back something at least $500-$1000/month (broken into daily or weekly repayments), depending on the length of your loan term.

                              With all that said, I think the best bet for you would probably be a personal loan, as these don’t have business income requirements and they may accept applicants with fair credit scores. A personal loan will also usually allow you to repay the loan over 2-5 years, compared to a short-term business loan that could require you to pay back the loan in just a few months. Here is a resource on personal loans for business to get you started. Prosper, Lending Club, and Lending Point are a few popular lenders in this category.

                              If you can improve your credit score so that it’s at least in the 600s, you might be able to qualify for a personal loan (though you’ll need to check each individual lender’s requirements). Also be sure to check the loan terms before accepting an offer to make sure you can afford the repayments.

                                This comment refers to an earlier version of this post and may be outdated.

                                Brad

                                I’m trying to start a trucking company and only have a credit score of 600 the only bad credit is hospital bills I got my EIN# and llc yesterday I need a lone to buy a commercial straight truck. Me and my wife have about 90,000 of personal income annul for 2 years but if we start are own business it would generate about 200,000 per year per truck the goal is to start small with one truck and after 2 years get 2 more and start hiring employees what are my options for lines of credit and financing of equipment

                                  This comment refers to an earlier version of this post and may be outdated.

                                  Shannon Vissers

                                  Hi Brad, we recently published The Best Business Loans For Trucking Companies which I think will help you. For your particular situation, since you just need to buy one truck, I think an equipment loan/lease might be the best fit.

                                    This comment refers to an earlier version of this post and may be outdated.

                                    Charlie

                                    I have a concrete business that once generated 3 million dollars in revenue annually. Due to illness and some personal issues, the business closed. I have overcome all the personal issues, and I am ready to restart the business. However, I do not have the working capital but I have equipment valued between $650k and $820, I need a loan of $100k -$150k to be able to restart the business. The construction industry is blooming and I have ready customers for my products. My credit score is about 600.

                                      This comment refers to an earlier version of this post and may be outdated.

                                      Kenneth Wells

                                      Hi,

                                      We’re a start-up Solar company doing about $50k in revenue, we are in need of some working capital. But can’t find anyone to approve us.

                                        This comment refers to an earlier version of this post and may be outdated.

                                        Jessica Dinsmore

                                        Hi Kenneth,

                                        I think this blog post on Working Capital should point you in the right direction! I’d also suggest this one, on being declined. Best of luck to you with your solar business!

                                          This comment refers to an earlier version of this post and may be outdated.

                                          Yvonne

                                          I have an idea for technology start-up. My credit is fair. I have a business plan, a non-working prototype. I would like a small business loan to get started on building a working product.

                                          Are there any lenders I should consider going to?

                                            This comment refers to an earlier version of this post and may be outdated.

                                            Jessica Dinsmore

                                            Hi Yvonne,

                                            I’d suggest looking over our startup loan comparison chart. We have their credit score requirements posted on the chart, so you can easily determine which ones you might qualify for. Good luck!

                                              This comment refers to an earlier version of this post and may be outdated.

                                              Walt Wade

                                              Hi I have mining claims lease for 11 years. My mine has certified registered geologist report stateing I have 6 million ton on the surface , my estimated ton is 300 million. Ton ton of my iron ore will produce 1500 pounds of gun grade steel. This is the only deposit of iron ore in the world at this time. I also have certified lab results showing 40 ounces of gold 400 ounces silver and copper. The mine is already approved to mine truck state BLM. I decided to build a foundry to pour the steel out and seperate the precious metals off the steel. This takes a 3 step melting process which have built all crushing and milling equipment greater exchange and 2 of the 3 melters needed for the separation. I spent all my money doing this and also ruined my credit doing it. I have decided to form 2 LLC companies one for the mine and the other for the foundry to keep them separate. I also want to write up a contract from my mine to my foundry for the production of 6 million tons of the iron ore. One ton of gun grade steel retails for 22 thousand my melter will produce 1.6 ton in 24 hours using foundry coke for fuel. That around 35 thousand a day in steel product and 78 thousand a day in gold and 7,500 a day in silver I am in need of 120 thousand to finish into production with in a 3 to 6 month time . Is this type of loan possible

                                                This comment refers to an earlier version of this post and may be outdated.

                                                Jessica Dinsmore

                                                Hi Walt!

                                                To be honest, this isn’t something we’ve ever encountered before, so it may be a bit outside of our expertise. I’d rather not give you an answer that I’m not too certain about. I’d suggest looking into lenders that specialize in the mining/industrial sector. If you happen to figure this out on your own, please let us know what solution you find so we can learn how to answer something like this in the future. Good luck!

                                                  This comment refers to an earlier version of this post and may be outdated.

                                                  Damaris

                                                  Hi, I have a credit score of about 656, a few late payments (less than a year old but maybe 6 or so months old), and I also have a bankruptcy that never went through with but is showing up as dismissed from 6 1/2 years ago. I am looking for startup funds to help purchase kitchen equipment and help with buildout payments to contractors for a small restaurant. Are there any companies or organizations that would approve funding with that credit history and only 1 sole owner?

                                                    This comment refers to an earlier version of this post and may be outdated.

                                                    Shannon Vissers

                                                    Hi Damaris, your credit history shouldn’t be a problem with any of these lenders; your approval will depend more on your current income. For most of these lenders, you will need to have been in business at least 6 months and already be generating business revenue. Avant doesn’t have any time-in-business or business revenue requirements but will want to see that you have sufficient personal income to support repayments.

                                                      This comment refers to an earlier version of this post and may be outdated.

                                                      Josh

                                                      Hello,
                                                      My credit score is bad (around 590 or so) and I need a start up business loan for a group home business (for individual with disabilities). Which of this lenders would be a perfect match for me?

                                                        This comment refers to an earlier version of this post and may be outdated.

                                                        Shannon Vissers

                                                        Hi Josh! I think Accion would be a good fit for you, as they are a nonprofit that lends to startups with bad credit and especially caters to inclusive businesses that help the community. They have pretty fair rates, too. If you don’t qualify, you may be able to get a small loan through Kiva if you can get some loan backers from your personal networks. Credibly lends to startup businesses that are already generating revenue, so you may also look into them if you’re making $15k/month.

                                                          This comment refers to an earlier version of this post and may be outdated.

                                                          Tiffany

                                                          Hello! Do any of the above lenders extend credit to owners of ecommerce/online businesses? I want to purchase an existing ecommerce business and while my credit is not terrible (650), I’d prefer not seek financing through a traditional lender.

                                                            This comment refers to an earlier version of this post and may be outdated.

                                                            Shannon Vissers

                                                            You could likely get a loan through a lender like Accion, Prosper, Avant, or Upstart (maximum $10K-$50K) but these are pretty small loans which likely would not be large enough to finance an entire business purchase. You might want to check out my article on business acquisition loans for some more ideas on how to finance your business purchase.

                                                              This comment refers to an earlier version of this post and may be outdated.

                                                              Marley Wells

                                                              I have bad credit below 550 and I want to open my own boutique. Which would be best for me bruh that I don’t have much income due to a art time job

                                                                This comment refers to an earlier version of this post and may be outdated.

                                                                Shannon Vissers

                                                                With a credit score that low, it will be pretty difficult to get a startup loan, especially since you don’t have much income or any time in business. You might be able to get a very small loan from Kiva, which doesn’t have any income or credit score requirements; however, businesses younger than 90 days can only get a max of $5K and businesses still in the idea stage can get a max. loan of $1K. Accion or Credibly might also be a possibility after you’ve been in business six months and started generating some revenue. You might consider establishing a home-based business and selling online or at events before opening the actual boutique — you can get a PayPal Working Capital loan once you have had a PayPal business account for a few months and are processing $15K a year.

                                                                  This comment refers to an earlier version of this post and may be outdated.

                                                                  Shanawaz khan

                                                                  Thanks for the useful and informative article! There should be less interest rates and easy repayments.

                                                                    This comment refers to an earlier version of this post and may be outdated.

                                                                    Max Baron

                                                                    I think PayPal Working Capital is one of the best lending services because PayPal’s Working Capital doesn’t charge interest and obviously Easy repayments and bad credit-friendly. I have to say the reasons because recently I got the loan in PayPal Working Capital.

                                                                      This comment refers to an earlier version of this post and may be outdated.

                                                                      clive ngobeni

                                                                      i nee a loan t pay for the franchise

                                                                        This comment refers to an earlier version of this post and may be outdated.

                                                                        Jessica Dinsmore

                                                                        Hi Clive,
                                                                        Here is a great article on Financing a Franchise that might be helpful to you. Good luck!

                                                                          This comment refers to an earlier version of this post and may be outdated.

                                                                          Marvin Bowen

                                                                          I think it’smay be in to take loans for bad credit if you have a good plan that would work if you’re about to do business.

                                                                          Like me, I am currently trying to get loans to bring my idea to life after I just got the patent, but it has been difficult getting a loan. I believe in the idea that if made right, it would work.

                                                                            This comment refers to an earlier version of this post and may be outdated.

                                                                            Steve Trooper

                                                                            Nice list of lenders for getting a business startup loan. There are some people that get a personal loan when trying to start a business and that is a bad decision. People should only get a personal loan for personal use hence the name. I have seen people take out a business installment loan online for bad credit. This is a big mistake. These loans should online be used for financial emergencies.

                                                                              This comment refers to an earlier version of this post and may be outdated.

                                                                              Fahad

                                                                              Thanks for this informational article, I really like the way of your dedication.

                                                                                This comment refers to an earlier version of this post and may be outdated.

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