The 5 Best Small Business Loans For Bad Credit In 2020
Whether due to sacrifices made while starting a business or other reasons, many business owners have poor credit. When you have bad credit, getting a business loan with fair terms and affordable fees can be difficult. While you could get a loan from one of many “payday lenders” who offer short-term loans with sky-high interest rates and tons of hidden fees, the price you’ll ultimately pay for the loan might not be worth it in the long run.
If you’re in the “bad credit” boat, you might think it’s impossible to get affordable financing for your business. Fortunately, that’s not always the case.
Many lenders are beginning to look at other business factors to judge the creditworthiness of your business. While most still pull your credit score to verify identity (and for additional reasons), you will find that high credit scores are not always necessary to qualify for financing.
The following lenders will work with you even if you have bad credit. Unlike payday lenders, they won’t take advantage of you. Of course, you’re not going to get the same good rates you would get with stellar credit — and yeah, you have to start paying back your loan pretty much right away. However, these lenders will get you cash when you’re in a pinch without ripping you off in the process.
The following are recommended lenders (and some honorable mentions) that have low credit score requirements. A couple of these lenders don’t check your credit at all. Read on to learn about your financing options.
Learn More About Our Top Picks
| Company | Summary | Next Steps |
|---|---|---|
 | Best for most businesses | |
 | Best for customizable business loans | |
 | Best for solving cash-flow problems | |
 | Best for new businesses | |
 | Best for invoice-dependent businesses |
Read more below to learn why we chose these options.
1. Best For Most Businesses: Lendio
Lendio
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Lendio is not actually a lender. It’s an online loan marketplace you can use to search and apply for business loans of all types, including short and medium-term loans, lines of credit, merchant cash advances, and others. Lendio has a vast lender network, which includes some lenders that accept applicants with bad credit (with a score as low as 550).
Lendio’s free service lets you prequalify for and compare multiple loan offers, so you can select the best one. Lendio saves you time and also ensures that you secure a fairly-priced loan, even if you have bad credit.
Lendio Borrower Requirements
Depending on which loan you apply to, Lendio’s borrower requirements vary. However, the company recommends that you at least meet the following minimum requirements:
| Time In Business: | 6 months |
| Business Revenue: | $10,000 per month |
| Personal Credit Score: | 550 |
Honorable Mention
- Fundera has a similar online loan marketplace that lets you compare and apply to different business loans online.
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2. Best For Customizable Business Loans: LoanBuilder
LoanBuilder
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LoanBuilder, as its name would imply, lets you “build” your loan to a certain extent. After you are pre-approved for a loan, you can tinker with the loan amount and term length and see how those changes affect your repayments. This PayPal-owned service makes it super easy to put together a customized short-term business loan that works for you, even if you have a credit score as low as 550.
Note that the service is also marketed as “PayPal Business Loans.”
LoanBuilder Borrower Requirements
Before applying for a LoanBuilder loan, make sure you meet the following minimum qualifications:
| Time In Business: | 9 months |
| Business Revenue: | $42,000 per year |
| Personal Credit Score: | 550 |
Your business must also be US-based.
Honorable Mention
- PayPal Working Capital is another PayPal short-term business loan option. It does not have any hard-stated credit score requirements. However, this loan is only available to PayPal sellers.
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3. Best For Solving Cash-Flow Problems: Kabbage
Kabbage
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Kabbage is a popular online lender that offers easy-to-use lines of credit for businesses. Although the company does check your credit score when you apply, Kabbage does not have any specific credit score requirements. Another bonus: For most merchants, the whole application process only takes a few minutes, after which you can start drawing from your credit line.
On the other hand, Kabbage’s rates tend to run a little high, and many people are critical of its fee structure (which is front-loaded, making it difficult to save on fees). Overall, however, Kabbage is worth investigating if you are looking for fast and easy access to a line of credit.
Kabbage Borrower Requirements
Even though Kabbage doesn’t have a minimum credit score requirement, it does require that you meet the following time in business and business revenue qualifications:
| Time In Business: | 12 months |
| Business Revenue: | $50,000 per year (or at least $4,200 for the last three months) |
| Personal Credit Score: | N/A |
Honorable Mention
- BlueVine has a small business line of credit as well, but you’ll need a “fair” credit score of at least 600 to qualify (among other qualifications).
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4. Best For New Businesses: Credibly
Credibly
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Credibly offers merchant cash advances and short-term working capital loans to businesses that have been in operation for as little as three months. Business expansion loans are also available. Credibly loans are not available in every state, so make sure Credibly serves your state before applying.
Credibly’s credit score requirements are quite lenient — you only need a score of 500 for a working capital loan or merchant cash advance. Credibly’s borrowing rates and terms are reasonably in line with those of similar lenders.
Credibly has a relatively easy online application process and good customer service. However, some users say that the application process took longer than expected. Note, the “48-hour funding” that Credibly advertises refers to how long it will take to receive the funds after your application is approved. Still, as long as you’ve got all your documents ready, the entire time from application to funding usually doesn’t exceed five days.
Credibly Borrower Requirements
To qualify for a working capital loan, make sure you meet the following minimum borrower requirements before applying:
| Time In Business: | 6 months |
| Business Revenue: | $15,000 per month |
| Personal Credit Score: | 500 |
Honorable Mention
- LoanBuilder, discussed above in more detail, is another poor-credit-friendly financing option that could be used for working capital once you have nine months in business.
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5. Best For Invoice-Dependent Businesses: Fundbox
Fundbox
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Because you can borrow money based on the value of your unpaid invoices, invoice financing services such as Fundbox are a useful tool for B2B and B2C businesses. With Fundbox, you can borrow 100% of your invoice value and repay in weekly installments over 12 or 24 weeks. If your business doesn’t deal with invoices, Fundbox also offers a traditional line of credit that is not backed by specific collateral.
This lender uses algorithms to gain a holistic view of your business and come to fast lending decisions. Most applicants will be able to fill out their application and learn about their eligibility in a few minutes.
Fundbox Borrower Requirements
Before you apply to Fundbox, first make sure you meet the following minimum qualifications:
| Time In Business: | No time in business requirements but must be able to show at least two months of activity with compatible accounting software or three months of transactions in a compatible business bank account |
| Business Revenue: | $50,000 per year |
| Personal Credit Score: | 500 |
Honorable Mentions
- BlueVine offers invoice factoring, a service in which you sell your unpaid invoices at a discount in exchange for immediate cash. Unlike many invoice factors, BlueVine does not require long-term contracts or factoring of specific invoices. At a maximum credit facility of $5 million, this company offers larger credit lines. You’ll need a minimum credit score of 530 to qualify (among other requirements). Don’t know whether to go with Fundbox or BlueVine? Check out our comparison.
- Riviera Finance offers more traditional invoice factoring services than Fundbox. This service can work with businesses in most industries, regardless of your time in business, revenue, or credit score. It offers a wide range of contracts, from month-to-month to 12 months in length.
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Final Thoughts
Even if you have bad credit, it’s still generally possible to find business loans.
In most cases, you’ll find that you’ll be offered higher rates and fees than somebody with a better credit score might get. To see what shape your credit is in before you start applying for loans, you can use a free credit score service. Nonetheless, if you don’t have the time or ability to improve your credit before applying for loans, these lenders will give you a good place to start.
Small business loans can enable businesses to purchase needed inventory and equipment or cover payroll during slow seasons. Though a traditional bank requires a good credit score to qualify for a loan, many online lenders will be willing to lend to you even if your credit isn’t anything to brag about. Just make sure that you look over the terms of the loan first before you accept it because a lot of short-term lenders have very crappy terms.
If your credit score is in the 600s or higher, you might want to compare rates from these 5 Online Loan Companies That Won’t Screw You Over for some even better loan options with longer terms and potentially lower fees.
Finally, another option to consider as an alternative to a loan is a credit card. If you have business expenses that you can pay for with a credit card and don’t necessarily need liquid cash, you should read about the best credit cards for bad credit to see what your best options are.
A Last Look At Our Top Picks
- Lendio
Summary - Best for most businesses - LoanBuilder
Summary - Best for customizable business loans - Kabbage
Summary - Best for solving cash-flow problems - Credibly
Summary - Best for new businesses - Fundbox
Summary - Best for invoice-dependent businesses
Shannon Vissers
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Great post! Thanks for sharing the knowledge and keep up the good work.
I have started a business and I want to get funds to enlarge the business feather but I short finance
I have more client but I can’t give them the service that they need because of shortage of stock
This comment refers to an earlier version of this post and may be outdated.
Nice list of loans provided in this blog. Thanks for sharing it.
This comment refers to an earlier version of this post and may be outdated.
Hi Shannon. My name is Lucy Wapen & I’m from Papua New Guinea. PNG is in the Pacific Island & its a developing country. I have a good business Ideal that I would like to do. I have search the internet, there’s a lot of scam that I came a cross. I would like to get some info from you on the real organization or financial firm that help women like me in developing country to start up their business dream whether it be a business loan or a grant. I want info on these areas pls help.
Thank you kindly.
Lucy
This comment refers to an earlier version of this post and may be outdated.
Hi Lucy, most of the lenders I write about are for US-based businesses but Kiva is one international microlender you may want to look at for a 0%-interest loan up to $10K. I believe Accion has some global partners as well that might provide loans in your area. So I would check both Kiva’s and Accion’s websites. As for grants, the Cartier Women’s Initiative grant contest is open to women in any country. Good luck to you!
This comment refers to an earlier version of this post and may be outdated.