Best Small Business Loans For Bad Credit

While traditional bank loans typically require a credit score of 670 or higher, many alternative lenders work with businesses that have a poor or limited credit history. 

Options include merchant cash advances, revenue-based financing, equipment financing, microloans, and invoice factoring. Note that most bad credit business loans have shorter repayment terms and higher interest rates and fees.

Credit score requirements vary by lender and loan type. SBA loans and traditional bank loans typically require a good to excellent score in the high 600s. Online lenders and alternative financing companies may approve borrowers with scores as low as 500. 

Options like revenue-based financing and merchant cash advances focus less on personal credit and more on your business revenue, but may come with shorter repayment terms, lower borrowing limits, and higher fees and interest.

Loan options for bad credit include merchant cash advances, business lines of credit from online lenders, equipment financing, microloans from nonprofits through the SBA Microloan program, and invoice factoring.

Bad credit business loans usually cost more than traditional financing. Depending on the loan type, rates may range from around 10% to 80%+ APR, while merchant cash advances can have much more expensive factor rates. 

The exact cost depends on your credit, revenue, time in business, loan type, and lender. Always compare the total repayment amount, not just the advertised rate.

You can improve your chances by showing strong business revenue, offering collateral, applying for a smaller loan amount, adding a co-signer with stronger credit, and meeting the lender’s requirements.

It can also help to build a record of on-time payments and compare lenders that work with bad credit borrowers. Microloans from nonprofit or community lenders may be worth a look if you don’t qualify for traditional financing.