The 5 Best Small Business Loans For Bad Credit
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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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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.
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.
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.
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).
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.
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
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:
- Bad Credit Equipment Leasing & Loans: 7 Equipment Financing Solutions If You Have Poor Credit
- 9 Ways To Finance Your Minority-Owned Small Business, Even If You Have Bad Credit
- 8 Best Small Business Loans For Startups With Bad Credit
- The 5 Best Business Lines Of Credit For Bad Credit
- How To Get A Merchant Account With Bad Credit: Navigating Credit Checks, The 5 Best Processors, & More
In Summary: Best Business Loans For Bad Credit
- Lendio:
- Offers: business loan matchmaking services
- Required credit score: 550+
- Credibly:
- Offers: Short-term business loans & cash advances
- Required credit score: 500+
- BlueVine:
- Offers: invoice factoring and business lines of credit
- Required credit score: 530+
- Fundbox:
- Offers: lines of credit
- Required credit score: 500+
- LoanBuilder:
- Offers: short-term business loans
- Required credit score: 550+
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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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.
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.