The 7 Best Small Business Loans For Bad Credit In 2019
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 other reasons), you will find that high credit scores are not always necessary to qualify for financing.
In this post, I’ve put together a few exceptions in the short-term loan industry. The following lenders will work with you even if you have bad credit, but they won’t take advantage of you. Of course, you’re not going to get the same good rates you would get with a longer-term loan and stellar credit — and yeah, you have to start paying back your loan pretty much right away. However, these lenders will get you fast 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.
Table of Contents
- Best For Most Businesses: Lendio
- Best For Customizable Business Loans: LoanBuilder
- Best For Invoice-Dependent Businesses: Fundbox
- Best For Solving Cash-Flow Problems: Kabbage
- Best For Startup Funds: Credibly
- Best For Microloans: OppLoans
- Best Nonprofit Lender For Bad Credit: Kiva
- Final Thoughts
Best For Most Businesses: Lendio
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 that includes 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 that you can select the best one. This 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, they recommend that you at least meet the following minimum requirements:
|Time In Business:||Six months|
|Business Revenue:||$10,000 per month|
|Personal Credit Score:||550|
- Fundera has a similar online loan marketplace that lets you compare and apply to different business loans online.
Best For Customizable Business Loans: LoanBuilder
LoanBuilder, as its name would imply, lets you “build” your loan to a certain extent. Using an online tool, 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, please make sure you meet the following minimum qualifications:
|Time In Business:||Nine months|
|Personal Credit Score:||550 or above|
|Business Revenue:||$42,000 per year|
Your business must be US-based.
- PayPal Working Capital is another PayPal short-term business loan option, and it does not have any hard-stated credit score requirements. However, this loan is only available to PayPal sellers.
- LoanBack is a customizable online loan platform that does not have any credit score requirements. Essentially, it is a service that puts together a contract to formalize a loan between two private parties.
Best For Invoice-Dependent Businesses: Fundbox
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. Fundbox also does not have any credit score requirements.
This lender makes it easy for most businesses to qualify. If you’re registered as a business and you’ve been using compatible accounting or invoicing services for at least three months, you have a good chance of qualifying for Fundbox (see borrower requirements below). 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 specific time-in-business requirement but must have been using compatible accounting/invoicing software for at least two months, or a compatible bank account for at least three months|
|Personal Credit Score:||N/A|
- 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 of $5,000,000, 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. They offer a wide range of contracts, from month-to-month to 12 months in length.
Best For Solving Cash-Flow Problems: Kabbage
Kabbage is a popular online lender that sells easy-to-use lines of credit for businesses with bad and fair credit. 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, they do require that you meet the following qualifications for time-in-business and business revenue:
|Time In Business:||12 months|
|Personal Credit Score:||N/A|
|Business Revenue:||$50K/year (or at least $4,200 for the last three months)|
- 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).
Best For Startup Funds: Credibly
Credibly offers startup-friendly merchant cash advances and short-term working capital loans up to $400K. Business expansion loans are also available to more established businesses. 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. Business expansion loans require a minimum score of 600 (though these loans are not for startups). 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 they expected. Note that the “48-hour funding” 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
Make sure you meet the following minimum borrower requirements before applying for a Credibly loan:
|Time In Business:||Six months for MCA or STL; three years for a business expansion loan|
|Personal Credit Score:||500 for MCA or STL; 600 for a business expansion loan|
For Expansion Loans, your average daily balance must be at least $3,000
- 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.
Best For Microloans: OppLoans
OppLoans offers personal microloans to borrowers with bad credit. Because the lender bases lending decisions on your personal creditworthiness, not the creditworthiness of your business, these loans can be used by entrepreneurs, startups, or other merchants who are still working on getting their business off the ground. OppLoans takes your credit score into consideration, but it does not require good credit.
Borrowers might be able to take out a loan between $1,000 and $4,000 with repayment terms up to 36 months. Because rates can be expensive — APRs max out at 199% — OppLoans is generally considered a funder of last resort. However, if you really need a few thousand dollars for your business venture and have weighed the risks and benefits, OppLoans might be worth the high price tag.
OppLoans Borrower Requirements
To qualify for a loan from OppLoans, you’ll need to meet these requirements:
- Be at least 18 years old OR at least 19 years old in the states of Alabama and Nebraska
- Have a source of income for at least the last two months
- Have a checking or savings account with at least three months of history
- Receive direct deposits
OppLoans also currently cannot lend to consumers in Arkansas, Colorado, Connecticut, Iowa, Maryland, Massachusetts, New Hampshire, New Jersey, New York, North Carolina, Pennsylvania, Vermont, and West Virginia.
- Avant offers personal loans of up to $35K that can be used for business purposes, including business expansion. The minimum credit score they will accept is 580.
- Upstart is another personal lender that business owners with less-than-great credit can use to obtain business expansion funds. Upstart requires a “fair” credit score of 620 or above (among other requirements) but will lend to businesses with thin or patchy credit histories.
Best Nonprofit Lender For Bad Credit: Kiva
Kiva U.S. is the United States branch of Kiva, the nonprofit crowdfunding platform. Instead of using traditional underwriting, the platform operates on the idea of “social underwriting.” To vastly oversimplify the concept, they’re hoping you’ll repay your loan because of peer pressure. Kiva U.S. underwriting does not rely on credit scores at all.
Loans from Kiva do not carry any interest or fees (naturally, borrowers still have to repay the principal). You’ll have to jump through a few hoops to get the money, though; the funding process can take up to two months, and you aren’t guaranteed a loan until funding goals are met. Nonetheless, the lack of fees and low borrower qualifications make Kiva a compelling choice for many entrepreneurs.
Kiva Borrower Requirements
Kiva does not have any hard-stated borrower qualifications. However, you will be required to recruit five to 30 backers from your personal circle to fund your loan, depending on how much money you’re requesting.
- Accion is a nonprofit online lender that will lend to borrowers with scores as low as 575 or even 550 in some places. Unlike Kiva’s loans, these loans do carry some interest, but at least you won’t have to get your friends and family to back your loan. Loan options and borrower requirements vary by region.
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 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 you could pay for with a credit card and don’t necessarily need liquid cash for, you should read about the best CC’s for bad credit to see what your best options are.