Best Loan Options for Businesses With Bad Credit

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Whether due to sacrifices made while starting a business or other reasons, many business owners have poor credit. If you’re in that 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 necessary to qualify for financing.

The following are five lenders (and some honorable mentions) that have low credit score requirements, or in the case of a few lenders, don’t check your credit at all. Read on to learn about your financing options.

For Startups: Kiva U.S.

kiva logo
Borrower requirements:
Must own a business that is not bankrupt or involved in illegal activities.
No time in business, revenue, or credit score requirements.
Visit the Kiva website

Kiva U.S. is the United States branch of Kiva (see our review), 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.

Head over to our full review for more information on Kiva U.S.

Honorable mentions: 

  • Upstart offers personal loans that can be used for business. They require a credit score of 620 or above, but specialize in lending to businesses with thin or non-existent credit histories.
  • Other crowdfunders, such as Kickstarter, Indiegogo, and others, generally don’t check credit scores, either. Like Kiva, the funding process can be long, and you typically aren’t guaranteed funding until you meet your goal.

For Businesses that Struggle with Cash Flow: Kabbage

Borrower requirements:
Must be in business at least 12 months with a revenue of $4.2K per month.
No credit score requirements.
Visit the Kabbage website

Kabbage (see our review) offers lines of credit. Although the company does check your credit when you apply, Kabbage does not have any 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.

Head over to our full review of Kabbage for more information.

Honorable mention:

  • OnDeck also offers a line of credit with better APRs. You’ll need to be in business for a year with a credit score of at least 500 to qualify for this one.
  • BlueVine offers a line of credit with lower rates as well, but you’ll need a credit score of at least 600 to qualify.

 

For Invoice Processing Businesses: Fundbox

Borrower requirements:
Must use compatible accounting software (see full review for details)
Visit the Fundbox website

Because factoring services use invoices as collateral, invoice factoring has always been a good way for B2B businesses to achieve financing, even if they have poor credit. Fundbox (see our review), a company that offers a service very similar to invoice factoring, is an especially useful resource for businesses that invoice their customers.

This lender does not do a credit check at all. In fact, their service is very easy to qualify for. If you’re registered as a business and you’ve been using one of these accounting/invoicing services for at least three months, you’re probably eligible to use the service.

Check out our full review for more information on Fundbox.

Honorable mentions:

  • BlueVine also offers invoice factoring without long-term contracts. At a maximum of $2.5M, this company offers larger credit lines. You’ll need a minimum credit score of 530 to qualify, though. Don’t know which one is right for your business? 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.

For Businesses That Need Debt Refinancing: Accion

Borrower requirements:
Requirements vary by state and loan product.
Credit score requirements generally range from 500 – 575.
Visit the Accion website

If you have debts with high rates, perhaps from credit cards or short-term loans, you might be able to refinance with Accion (see our review). This nonprofit lender specializes in offering loans to historically underserved businesses, and can offer lower rates than other lenders due to their nonprofit nature.

Accion’s longer repayment terms and lower rates could be useful for merchants who are struggling to make payments on their current debt. Although you’ll still need a credit score of at least 500 to 575 (depending on the area and the product), poor credit isn’t generally an obstacle to receiving funding.

This lender’s product offerings vary by state. Head over to our full review to learn more.

For Everyone Else: OnDeck

Borrower requirements:
Must be in business at least 12 months with a revenue of $100K per year.
Must have a personal credit score of 500 or above.
Must not be in one of OnDeck’s restricted industries
Visit the OnDeck website

OnDeck (see our review) offers two useful loan products: short-term loans and lines of credit. They’re a little more difficult to qualify for than others on this list, as you’ll need to have a credit score of at least 500 to qualify, along with the other above requirements. However, if you do qualify, you’ll find that OnDeck offers very flexible and useful loan products.

This lender is one of the fastest funders on this list; typically, the application takes less than 24 hours, and the funds arrive a couple of days later.

Head over to our full OnDeck review for more information.

Last Words

Even if you have bad credit, it’s generally still 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. 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.

If none of these options are right for your business, your next stop is our comparison page for small business loans.

Bianca Crouse

Bianca Crouse

Bianca is a writer from the Pacific Northwest. As a product of the digital age, she likes absorbing large amounts of information and figures she might as well pass it on. When not staring at a screen, she is probably foraging for food outside, playing board games, or harassing somebody with theories about that movie she just watched.
Bianca Crouse
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