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

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bad credit startup loansFew 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.

1. BlueVine 

Best for: Young B2B or B2C businesses already generating revenue.

BlueVine (see our review) is one of our favorite lenders in the line of credit (LOC) lending space, in part because the borrower requirements for Flex6, their six-month line of credit, are easier for businesses to meet than most other LOCs. Note, however, that this product is only available to startups already generating revenue — you must be in business at least six months and make $120,000 per year to qualify. Additionally, BlueVine also offers invoice factoring services, which can be used by B2B startups. If you meet these prerequisites, you have a good chance of qualifying for a Flex6 line of credit or invoice factoring services:

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: $120,000 per year for line of credit; $100,000 per year for invoice factoring
  • LOC borrowing amount: $5,000 – $5,000,000
  • LOC term length: 6 months
  • LOC APR: 15% – 78%

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

Apply for BlueVine funding


2. Accion Accion startup loans

Best for: Entrepreneurs with a business plan and little personal debt.

Accion (see our review) 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 score575 (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
  • Term length: 6 – 60 months
  • APR: 7% – 34%
  • 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

Find out more about Accion


kiva logo

3. Kiva U.S.

Best for: Entrepreneurs with a lot of personal connections.

Crowdfunding, also sometimes called “peer-to-peer lending,” is another viable way to get startup funding with bad credit; Kiva U.S. (see our review) (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 interest-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 open up to the general public for funding.

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

Learn more about Kiva


4. American Receivable american receivable startup friendly

Best for: B2B businesses and startups that have unpaid invoices.

American Receivable (see our review) is a highly rated invoice factor for B2B businesses. Invoice factoring is a type of funding in which a business sells its accounts receivable at a discount to a factoring company. Because financing is based on the value of your invoices, American Receivable is only an option for B2B startups that have unpaid invoices. Invoice factors such as 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


5. Avant avant startup loans

Best for: Entrepreneurs and business owners who have good personal finances.

Personal loans are yet another way brand-new businesses can receive startup funds, as these loans are based on your personal creditworthiness, not the strength of your business. Avant (see our review) 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: $1,000 – $35,000
  • 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

Check your rate with Avant


6. Credibly Credibly startup loans

Best for: Young businesses already generating revenue.

Credibly (see our review) 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: $15,000/month
  • Working Capital Loan term length: 6 – 17 months
  • Business Expansion Loan term length: 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 can be a bit high; however, the money comes through fast. Unlike most short-term financers, which require daily repayments, Credibly offers the option of weekly repayments.

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

7. PayPal Working Capital PayPal Working Capital loans for startups

Best for: PayPal sellers with a Business or Premier PayPal account.

PayPal Working Capital (see our review) offers 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 $15,000/year.
  • Borrowing amount: $1,000 – $97,000 (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 fee that is repaid along with the loan. To repay, PayPal will collect a small percentage of your daily sales until you have repaid the loan and the fee. =

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

Shannon Vissers

Shannon is a freelance writer and editor based in San Diego, CA. Shannon has a three-year-old daughter named Izzy. Shannon likes to unwind by watching trashy reality television and reading literary fiction during the commercial breaks.
Shannon Vissers

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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.

    Shanawaz khan

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

      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.

        clive ngobeni

        i nee a loan t pay for the franchise

          Jessica Dinsmore

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

            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.

              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.


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

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