Don’t Let Bad Credit Stop You From Getting A Startup Loan
Few things in life feel as good as a fresh start. This is especially true when you’re launching a new business and are full of enthusiasm to start making your dream a reality. But if you’ve been through some financial hardships that have left your credit score battered and bruised, a fresh start can be hard to come by. How can you get the startup funds you need when most banks won’t touch you with a ten-foot pole?
This is where alternative financing — via microlenders, invoice factoring, and crowdfunding — can come in. Contrary to popular thought, it is totally possible to get a reasonably priced startup loan, even if you have a poor personal credit score of 600 or even lower. What follows are seven highly rated lending services that might be able to propel you toward that fresh start in business you’ve been dreaming of.
Table of Contents
1. Accion 
Accion is a nonprofit microlender offering medium-term installment loans to startups and existing businesses. If you have poor personal credit but need a small startup loan, Accion is one of the few reputable online lenders that can help you out without screwing you over.
Accion Terms and Prerequisites
- Minimum credit score: 575 (500 in some places)
- Required time in business: N/A; however, if you have been in business for fewer than six months, you must also meet these requirements:
- Your business is home- or incubator-based
- You have less than $500 in past-due debt
- Borrowing amount: Up to $10,000 for startups
- Term: 6-60 months
- APR: Approx. 9.5%-33%
- Collateral: Personal guarantee; specific collateral in some situations
Accion lets borrowers repay loans on a monthly rather than a weekly basis; this differentiates the company (in a good way) from many of its competitors in the short- and medium-term lending space.
Why We Like Accion
- Startup and bad credit-friendly
- Fantastic customer service
- Low qualification requirements
- Fair terms and rates
- Fast time-to-funding
- Business education resources
- Monthly repayments
2. Kiva U.S. 
Crowdfunding, also sometimes called “peer-to-peer lending,” is another viable way to get startup funding with bad credit; Kiva U.S. (and most other crowdfunded lenders) do not check your credit at all. And Kiva’s short-term installment loans have the benefit of charging 0% interest – that’s right, they’re completely free.
Kiva U.S. Terms and Prerequisites
- Minimum credit score: N/A
- Required time in business: N/A
- Borrowing amount: Up to $10,000
- Term: 6-36 months
- APR: 0%
- Collateral: N/A
- Additional requirements: Depending on the size of your loan and other factors, you need to get the backing of 5 to 35 lenders from within your own personal network of friends, family, business contacts, etc. After you get the required social backing from your own network, the loan will go public.
Like Accion, Kiva is a good choice for startups with bad credit (or no credit!) who need just a small loan to get started. However, you have to be comfortable requesting backing from your own social network. A couple other crowdfunded loan options you might want to check out are Kickstarter and Indiegogo.
Why We Like Kiva U.S.
- Startup and bad-credit-friendly
- Great customer service
- No interest
- No credit check
3. American Receivable 
American Receivable is a highly rated invoice factor for B2B businesses. Invoice factoring is a type of funding in which a business sells its accounts receivable to a factoring company at a discount. Invoice factors like AR typically do not have any requirements about time in business or credit score.
American Receivable Terms and Prerequisites
- Minimum credit score: N/A
- Required time in business: N/A
- Advance rate: Typically 85% – 90%
- Discount rate: 0.8% – 2%/mo
- Contract length: 1-year commitment
Note that invoice factoring is only an appropriate form of startup financing for certain businesses – specifically, B2B or B2G businesses. Riviera Finance is another solid invoice factoring option for poor-credit startups.
Why We Like American Receivable
- Startup and bad-credit friendly
- Fast invoice funding
- Helpful customer service
- Transparent and flexible terms
- Non-recourse factoring provides merchants extra protection in case customer declares bankruptcy
Learn more about American Receivable
4. Avant 
Personal loans are yet another way brand-new businesses can receive startup funds, as these loans don’t have any time-in-business requirements. Avant is a reputable provider of personal installment loans that can be used for business, and they also accept credit scores that most personal lenders would balk at.
Avant Terms and Prerequisites
- Minimum credit score: No hard-stated minimum; however, they will loan to borrowers with scores as low as 600.
- Required time in business: N/A
- Borrowing amount: $1K–$35K
- Term length: 2–5 years
- APR: 9.95% – 36%
Note that while Avant accepts poor-credit borrowers (though not very-poor-credit borrowers), you may be denied funding based on other reasons, such as insufficient personal income to meet the incremental payments. They do not have any business income requirements, however.
Why We Like Avant
- Startup and bad-credit friendly
- Responsive and helpful customer service
- Fast application process
- Fair rates and fees (especially compared to other personal lenders such as payday lenders)
- No prepayment penalty
- Lower-than-usual borrower qualifications
- Monthly repayments
5. Credibly 
Credibly originates short-term loans, including working capital loans and business expansion loans. This company is startup-friendly (though you do have to have been in business for 6 months) and will accept you even if you have very poor credit. Woo-hoo!
Credibly Terms and Prerequisites
- Minimum credit score: 500
- Required time in business: 6 months
- Revenue qualifications: $10K/month
- Working Capital Loan Term: 6–17 months
- Business Expansion Loan Term: 18–24 months
- APR: Varies widely (Learn more)
- Collateral: UCC-1 blanket lien, personal guarantee
Credibly offers two separate loan products (working capital loans and business expansion loans), which have different terms and fees; Credibly’s longer-term business expansion loans charge interest instead of a one-time fee. Like other short-term financers, Credibly’s rates are on the high side; however, the money comes through fast. And if you do the business expansion option, you can pay your loan back weekly instead of daily (unlike with most short-term loans).
Why We Like Credibly
- Startup and bad credit-friendly
- Easy application process
- Low borrower prerequisites
- Good customer service
- Weekly repayments (on business expansion loan)
Get pre-qualified for a Credibly loan
6. Bluevine 
Bluevine is one of our favorite lenders in the line of credit (LOC) lending space, in part because they also have some of the laxest borrower requirements among LOC lenders. A line of credit is an appropriate form of financing for new business owners who don’t know exactly how much they’ll require but want to be able to withdraw cash as they need it. Additionally, BlueVine also offers invoice factoring services to B2B startups.
BlueVine Terms and Prerequisites
- Minimum credit score: 600 for line of credit; 530 for invoice factoring;
- Required time in business: 6 months for line of credit; 3 months for invoice factoring
- Revenue qualifications: $10K/month
- LOC borrowing amount: $5K–$100K
- LOC term length: 6 months
- LOC APR: 21% – 65%
Why We Like BlueVine
- Startup and bad credit-friendly
- Solutions for cash-flow problems
- Excellent customer service
- Fast time to funding
- Easy application process
- Transparent advertising
- No maintenance fees or lockbox fees
7. PayPal Working Capital 
PayPal Working Capital sells short-term loans that function similar to merchant cash advances. These loans have no credit requirements and are a good option to consider if you already do business on PayPal.
PayPal Working Capital Terms and Prerequisites
- Minimum credit score: N/A
- Required time in business: 3 months
- Additional requirements: Must have a PayPal Business or Premier account and process at least $15K/year.
- Borrowing amount: $1K – $97K (first loan)
- Loan term: 18 months max.
- APR: Varies widely (learn more)
As with most other short-term lending options, PayPal’s Working Capital doesn’t charge interest; rather, you are charged a one-time upfront fee. You repay your loan automatically as a daily deduction from your PayPal sales.
Why We Like PayPal Working Capital
- Startup and bad credit-friendly
- Fast application process
- Low fees
- Easy repayments
- Fast access to cash — get money within minutes of accepting a loan offer
Apply for a PayPal Working Capital loan
Final Thoughts
The great thing about all of these bad credit startup loans is that, with a few exceptions, the application process is quick, painless, and entirely online. Also, there’s no risk to getting pre-approved, as this only requires a “soft” credit check that does not impact your credit score. That means you can get prequalified for as many loans as you like, and then compare your offers to choose the best one.
If you check out some loan options and are not pleased with the offers you’re getting based on your current credit score, you might consider trying to improve your score or looking into further alternative financing ideas. The following resources have some information on how to improve your credit score and some other ideas for funding your startup.
Shannon Vissers
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