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The 5 Best Small Business Loans For Bad Credit

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Bad credit

When you have bad credit, getting a business loan with fair terms and affordable fees can be difficult. 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 your business’s creditworthiness, even for first-time business loans with bad credit. While most still pull your credit score to verify your identity (and for additional reasons), you will find that high credit scores are not always necessary to qualify for financing.

The following lenders (and honorable mentions) offer solutions for how to get a business loan with bad credit to those that might not qualify for the products of other lenders.

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  • Offers: business loan matchmaking services
  • Required credit score: 550+
  • Offers: business loan matchmaking services
  • Required credit score: 550+

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  • Offers: Short-term business loans & cash advances
  • Required credit score: 500+
  • Offers: Short-term business loans & cash advances
  • Required credit score: 500+

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  • Offers: invoice factoring and business lines of credit
  • Required credit score: 530+
  • Offers: invoice factoring and business lines of credit
  • Required credit score: 530+

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  • Offers: lines of credit
  • Required credit score: 500+
  • Offers: lines of credit
  • Required credit score: 500+

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  • Offers: short-term business loans
  • Required credit score: 550+
  • Offers: short-term business loans
  • Required credit score: 550+

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Read more below to learn why we chose these options.

Best Business Loans For Bad Credit

Even with bad credit, you can still get approved for a small business loan. Various online lenders offer bad credit business loans. You’ll have to pay more for the loan than someone with good credit, but many lenders will still lend to your business if you earn enough to make your payments. Here are the five best business loans for bad credit.

1. Lendio: Best For Short-Term Business Funding

Lendio



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Pros

  • Free service
  • Saves time by sending your application to multiple lenders at once
  • Some lenders accept scores as low as 550

Cons

  • Not all lenders are bad-credit friendly
  • Not for brand-new businesses that aren’t making money yet

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, and merchant cash advances, among others. Lendio has a vast lender network, including 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 that you can select the best one. Lendio saves you time and ensures that you secure a fairly-priced loan, even if you have bad credit.

Lendio Borrower Requirements

Depending on which loan you apply for, 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. Credibly: Best For Working Capital

Credibly



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Pros

  • Credit score can be as low as 500
  • Only need six months in business
  • Discount for early repayment
  • Loans as large as $400K

Cons

  • Can take longer than some other online lenders
  • Blanket lien required
  • Rates can be expensive

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 is another option for a working capital loan with bad credit once you have nine months in business.

Get Started with Credibly

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3. BlueVine: Best For Solving Cash-Flow Problems

BlueVine



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Pros

  • Low credit score qualifications
  • Application is fast and easy
  • Turn unpaid customer invoices into cash
  • Funds get disbursed quickly

Cons

  • Rates can be high
  • Repayments are required quickly

BlueVine’s invoice factoring service buys your unpaid invoices and gives you a lump sum of cash, so you don’t have to wait for invoice payments to come through to get paid, thus helping smooth out your cash flow. Though credit score requirements are relaxed, rates and terms depend on your company’s credit score.

In addition to invoice factoring, BlueVine also offers two different types of business credit lines. These are harder to qualify for than BlueVine’s invoice factoring service, however.

BlueVine Borrower Requirements

BlueVine’s invoice factoring service requires that you meet the following time in business and business revenue qualifications:

Time In Business 3 months
Business Revenue $10,000 per month
Personal Credit Score 530

Honorable Mention

  • Riviera Finance offers a traditional invoice factoring service. 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.

Get Started with BlueVine

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4. Fundbox: Best For Fast Business Funding

Fundbox



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Pros

  • Only need a credit score of 500
  • No time-in-business requirement
  • Get approval decision in minutes

Cons

  • Small credit limits ($100K or less)
  • Must repay the loan quickly (over 12-24 weeks)

Fundbox offers a traditional line of credit that is not backed by specific collateral and fast business loans, even with bad credit. To qualify, you only need a credit score of 500 — lower than that of most competitors. Fundbox had been offering invoice financing as well but is not currently doing so.

Fundbox uses algorithms to gain a holistic view of your business and come to quick 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 2 months of activity with compatible accounting software or 3 months of transactions in a compatible business bank account
Business Revenue $50,000 per year
Personal Credit Score 500

Honorable Mentions

  • 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).

Get Started with Fundbox

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5. LoanBuilder: Best For Customizable Business Loans

LoanBuilder



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Pros

  • Credit score can be as low as 550
  • Customizable loans
  • Easy application
  • You don’t need to have a PayPal account

Cons

  • Not available for startups
  • No discounts for repaying early

LoanBuilder, as its name would imply, lets you “build” your loan to a certain extent. After you are preapproved 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 option for short-term business loans with bad credit. It does not have any hard-stated credit score requirements. However, this loan is only available to PayPal sellers.

Read our in-depth review

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Best Types Of Business Loans For Bad Credit

To improve your chances of getting a loan despite bad credit, look for types of business loans that don’t place as much emphasis on credit during the application and review process. Types of loans for bad credit you might want to consider include:

  • Online Loans: Also called “alternative lenders,” online lenders place less importance on credit scores because they examine non-traditional risk metrics.
  • Microloans: Microloans feature small borrowing amounts and short-to-medium repayment terms. Microloans are considered low-risk because loan amounts are small, so poor credit isn’t always a barrier to funding.
  • Invoice Financing: Invoice financing is a type of loan in which you put up your unpaid invoices as collateral in exchange for immediate financing. Because invoice financing is dependent on your customers paying their invoice, not you, your credit is not an important consideration.
  • Crowdfunding: Although crowdfunding can be significantly more work than other types of business financing, your credit score isn’t usually a consideration. Instead, backers decide to contribute to your fund based on your business plan’s strength, a desire to contribute to a business in a particular community, or some other factor.
  • Business Credit Cards: You won’t qualify for the best credit cards if you have bad credit, but many issuers still offer credit cards for businesses with low scores. In addition to granting you access to cash, credit cards will help you build your credit up so that you can get better financing down the line.

How To Get A Business Loan With Bad Credit

Can you get a business loan with bad credit? Yes, but finding a business loan when you have poor credit does present an extra challenge. Here are four things you can do to make sure you’re getting the best loan possible.

Check Your Credit Reports

Take a good look at your credit score and reports before you start looking for a small business loan. You might discover there are errors you can fix or forgotten debt you can pay off, which could improve your credit score quickly. Knowing your credit score will also help you find lenders that work with borrowers in your credit range.

You can check your credit reports for free annually by ordering them from the credit reporting agencies. Additionally, you can monitor your score and reports by signing up for a free credit score website.

Know How Much You Can Borrow

Don’t get stuck with money you’ll struggle to pay back. Take a good look at your financials to understand how much you can repay monthly. Coming to lenders with this knowledge will help you make the right decision about which loan terms are best for your situation.

Take a look at our guide to Debt to Income (DTI) Ratio and Debt Service Coverage Ratio (DSCR) to learn how to calculate your borrowing limits.

Shop Around

Though it can be tough to get a business loan with bad personal credit, know that you have options. Don’t take the first loan offer that you find. Instead, take some time to learn about all the loans available to you and compare options.

Understand The Loan Terms

Bad credit small business loans often come with unfamiliar fee structures and borrowing terms. Before accepting a business loan offer, make sure you understand the borrowing terms. Take the time to learn:

  • How much you’ll be paying every month
  • How much you’ll be paying in fees overall
  • What happens if you repay the loan early
  • What happens if you make a late payment
  • What your options are if you can no longer repay the loan

By understanding this information, you will be able to compare loan offers and choose the best option for your business.

Business Loans & Bad Credit: FAQs

Is it possible to get a business loan if I have bad credit?

Yes, it is possible to get a business loan if you have bad credit. However, you will most likely face larger fees and smaller borrowing amounts than borrowers with good credit. If you have poor credit, you might be able to improve your chances of getting a loan if you can put up collateral or prove that you have strong credentials in other areas (i.e., healthy business revenue and industry experience).

What credit score do I need to get a business loan?

You will usually need a score of at least 500 to secure a business loan, such as a short-term loan or line of credit. Some online lenders do not have any stated minimum credit score requirement. However, they will usually pull your credit and verify your personal and business information to look for any red flags that would indicate you won’t be able to repay your loan.

Where can I get a business loan for bad credit?

The best place to get business loans for bad credit depends on several factors, including what specific type of financing you need, how long you’ve been in business, how much revenue your business makes, and your credit score. The lenders listed in this article are a good place to start.

How much do bad credit business loans cost?

Business loans for poor credit are not cheap. You could end up paying as much as 40% of your loan amount or more in fees. The amount you will have to pay will depend on your business credentials, which lender you choose, the size and term length of your loan, and other factors. Often, lenders have loan calculators on their websites to help you get a rough idea of what your fees could be.

Are there any resources to help me get a bad credit business loan?

If you have not been able to qualify for a business loan on your own due to bad credit, it is a good idea to check if any local business associations are offering low-interest loans to struggling small businesses in your region. Local Community Development Financial Institutions, in particular, may be able to help provide a loan or connect you to resources that can help.

More Resources For Business Loans & Bad Credit

Even if you have bad credit, it is still generally possible to find business loans.

Low credit score 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 before accepting an offer because a lot of short-term lenders have 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 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 explore your best options.

Here are even more resources for businesses with bad credit:

In Summary: Best Business Loans For Bad Credit

  1. Lendio:
    • Offers: business loan matchmaking services
    • Required credit score: 550+
  2. Credibly:
    • Offers: Short-term business loans & cash advances
    • Required credit score: 500+
  3. BlueVine:
    • Offers: invoice factoring and business lines of credit
    • Required credit score: 530+
  4. Fundbox:
    • Offers: lines of credit
    • Required credit score: 500+
  5. LoanBuilder:
    • Offers: short-term business loans
    • Required credit score: 550+
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.
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5 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.

    Liam Patterson

    Great post! Thanks for sharing the knowledge and keep up the good work.

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

      George Matlou

      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.

        Sagar Dongare

        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.

          Lucy Wapen

          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.

            Shannon Vissers

            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.

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            Our unbiased reviews and content are supported in part by affiliate partnerships, and we adhere to strict guidelines to preserve editorial integrity. The editorial content on this page is not provided by any of the companies mentioned and has not been reviewed, approved or otherwise endorsed by any of these entities. Opinions expressed here are author’s alone.

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