This article was reviewed by Doug Noll, a member of the Finder Editorial Review Board and award-winning lawyer, mediator and author with over 40 years of experience in the legal field.
It's possible to get a business loan when you have bad credit, or a credit score between 300 and 579. But it can limit your options when you need a business loan. In many cases, bad credit business loans have higher interest rates and fees than your typical loan. Those that don't have extensive applications or may require you to enroll in training courses.
Our team has reviewed over 220 business loan providers before compiling this list of the best business loans for bad credit. We picked these lenders based on factors like rates, fees and customer reviews. And we made sure to include options for borrowers with the lowest credit scores or none at all.
Our selections are updated regularly. In July 2021, we made replaced Fora Financial with Credibly because Credibly offers a faster turnaround time and is more transparent about pricing.
Accion is a nonprofit microlender that offers loans from $300 to $250,000. It doesn’t have firm minimum credit score requirements in all areas, though even when it does they’re flexible. But more importantly, Accion offers some of the lowest interest rates available to business owners with bad credit, with APRs that stop at 34%. It also works with startups. The main drawback is that the hands-on application process can take over a week — which is not ideal for emergencies.
Low interest rates and fees for a bad credit lender
Special loan offers like COVID-19 relief available by region
Startup financing available
Long turnaround time
Minimum credit score varies by area
No loans over $250,000
$5,000 – $100,000
5.99% to 25.99%
12 to 60 months
12+ months in business, $50,000+ in annual sales, 20%+ ownership of business, 18+ years old
Lendio is a good option when you don’t know where to start. It has a network of over 75 lenders that offer a wide array of business loans, including SBA loans. You can even qualify with bad personal credit. But it’s not free — once your loan is finalized, you’ll have to pay an origination fee to Lendio. And you may receive marketing calls and emails from lenders long after you’ve taken out a loan.
Network of over 300 lenders
Wide range of business loan options
Additional tools available
Must pay origination fee after loan is finalized
May receive marketing material from lenders
$500 – $5,000,000
Starting at 6%
Min. Credit Score
1 to 25 years
Operate business in US or Canada, have a business bank account, 560+ personal credit score
FundThrough is an online invoice financing and factoring company. Its application is fully automated and simple enough to use on your phone. You can get invoice financing equivalent to 100% of your invoice’s value for up to $15,000 — or factoring up to $10,000,000 within 24 hours. But while its fees are competitive compared to other factoring companies, this option is still more expensive than your typical business loan. Save it for when you don’t have the time to apply for a traditional loan or have struggled to qualify for financing elsewhere.
100% advances available
Advances as low as $500
No long-term commitment
More expensive than traditional financing
Invoice financing capped at $15,000
$500 – $10,000,000
1 to 3 months
Regularly receives invoices due within 30 to 90 days.
SBG Funding is one of the few lenders that works with bad credit business owners. While its APR starts higher than your standard term loan, it's low compared to other bad credit options. It also has a responsive customer service team, so you can get assistance when you need it. But it has a high annual revenue requirement, and you might have to make weekly repayments.
Low starting APR of 5%
Works with businesses in high-risk industries
Responsive customer service
High annual revenue requirement of $150,000
Potential weekly repayments
Not transparent about fees
$5,000 – $5,000,000
Starting from 21%
Min. Credit Score
12 to 60 months
6+ months in business, 500+ credit score, $150,000+ in annual revenue
Loanbuilder — a PayPal service — offers short-term loans with flexible requirements, including a low minimum credit score requirement. It's great for an emergency, since you can potentially get your funds the business day after you apply. Instead of interest, it charges a one-time fee that's low compared to other similar products — though it's more costly than a standard business loan.
Potential next-day turnaround
Low revenue and credit requirements
High cost compared to other types of loans
$5,000 – $500,000
6.49% to 19.31%
Min. Credit Score
3.25 to 12 months
Annual business revenue of $42,000+, 9+ months in business, 620+ personal credit score
This microlender offers 0% APR loans to all credit types and funds them using donations. But you'll have to have some support from friends — you're required to get at least 10 people you know to contribute to your campaign before it opens to the wider Kiva community. If that's feasible for you, it's one of the best deals out there. Update: In light of the COVID-19 pandemic, Kiva has announced it will loosen its eligibility requirements and extend its maximum loan amount by $5,000 — to a total of $15,000. Additionally, borrowers can request a six-month grace period before payments are due.
No interest or fees
No credit or residency requirements
Loans as low as $25
Turnaround of up to 45 days
No loans over $15,000
Qualifying depends on social network
$25 – $15,000
1 to 3 years
Have members of social network willing to contribute, live in US, ages 18+, not in bankruptcy, not a registered sex offenders or terrorist, not convicted of violent or financial crimes in past five years.
Kickpay offers low-cost inventory loans to help e-commerce startups purchase inventory. It charges a low fee of 3% to 7% of your inventory’s price. And it prevents you from over borrowing by capping the advance at 85% of the value of the inventory you have in stock — or what you would normally sell over the 16-week term. The main drawback is that it’s limited to online sellers who work with fulfillment centers that Kickpay works with.
Low fee of 3% to 7% of inventory value
Pays your manufacturer directly
Offers direct phone line to company owners
All inventory must be stored in US
Must use an eligible fulfillment center
No customer service until you apply
$20,000 – $1,000,000
At least $250,000 in the past 12 months of revenue, e-commerce business, use a 3rd party fulfillment center for storing and shipping inventory, at least one US location.
Credibly offers fast, relatively low-cost merchant cash advances (MCAs), which are an advance on your future sales. Where some providers don’t offer factor rates under 1.3, Credibly’s start at 1.15. And you can receive your funds as soon as the same day you’re approved. You also don’t need more than six months in business to qualify — although the bank deposit requirement of $15,000 a month is a little higher than average for an MCA. Credibly is also uniquely transparent about costs. But even the least costly MCAs are still an expensive product. You may want to consider other options first.
Low starting factor rate of 1.15
Accepts 500 credit scores
Transparent about pricing
No advances over $400,000
Daily or weekly repayments
More expensive than most non-MCA options
$5,000 – $400,000
Min. Credit Score
3 to 18 months
6+ months in business, $15K+ in monthly deposits, 500+ credit score
What types of small business loans can I get with bad credit?
It’s possible to get almost any type of small business loan with bad credit. But these are the most common options available through bad credit lenders.
Microloans are small-dollar loans from nonprofit lenders. They usually run as high as $50,000 for working capital and usually have the lowest rates available to bad credit borrowers. They often have more flexible payments than other options.
Inventory financing is usually a loan to purchase inventory, based on how much you typically sell over a few months. Often companies send the funds directly to the manufacturer.
Equipment financing offers a loan backed by the equipment you're purchasing. Since collateral is built into the loan, you can sometimes get approved for lower rates, even if you have a credit score below 500.
Generally, interest rates and fees on bad credit business loans are much higher than other options. Having poor credit often means you won’t qualify for the lowest rate available. It’s common for bad credit borrowers to qualify for the highest rates available — often annual percentage rate (APR) of around 60% or more. In some cases, rates can even run as high as 300% APR.
What's the easiest business loan to get?
The easiest business loan to qualify for is equipment financing, according to the Federal Reserve. Lenders approved 87% of equipment and auto loan applications in 2020 — more than any other type of financing. Merchant cash advances came in second, with an 84% approval rate.
The hardest business loan to qualify for? Personal loans for business use. Only 43% of personal loan applicants were approved.
Where can I get a business loan with bad credit?
Start your search for a business loan when you have less-than-perfect credit with these types of lenders.
Many online lenders look at different factors than traditional lenders — and are typically open to bad credit. Often, they connect with your business’s bank account or accounting software to take a deep dive into your finances and growth potential.
These lenders typically offer term loans, lines of credit and other types of working capital financing. You can sometimes find equipment and commercial real estate loans through these lenders.
This makes it easier to qualify with bad credit. But the downside is they often charge higher rates than traditional lenders. And you need to do a little detective work to make sure the companies are legit.
Community banks and credit unions typically require you to sit down with a loan officer to discuss your options. Unlike big banks, smaller financial institutions often have some flexibility with their credit criteria.
This gives you a chance to explain any negative marks on your personal credit score. If you have a good reason for the low rating — say you got a divorce — your lender might be willing to make an exception to its credit score policy.
These lenders tend to charge the lowest rates, and offer a chance to improve your credit score. You can also find other products like business credit cards.
Asset based lenders offer financing backed by business assets, like accounts receivable, invoices, equipment or real estate. The difference between an asset-based loan and a secured business loan is you’re using collateral you already own, not real estate or equipment you’re using the loan to purchase.
Usually these lenders also work with businesses that don’t have the cash flow to qualify for a loan at a local bank or credit union.
Merchant cash advance and factoring companies
A merchant cash advance and invoice factoring both offer advances on future revenue that you can use for working capital. With a merchant cash advance, you can get an advance on your business’s future credit and debit card sales. With invoice factoring, a factoring company purchases your unpaid customer invoices at a discount.
Since they’re advances, many don’t consider your credit at all. But save these as a last resort. They’re one of the most expensive types of financing out there.
Alternative lenders offer high-cost short-term financing for small businesses — and are absolutely a last resort. These working capital loans often work like a merchant cash advance, where your loan amount is based on your monthly revenue and you pay a fixed fee instead of interest. These are available to high-risk industries, bad credit borrowers and typically have low credit requirements.
Do lenders consider personal or business credit scores?
Lenders most often look at the personal credit of all business owners — that is, anyone with more than a 20% stake in the company. That’s because most business loans come with a personal guarantee, which means you’re responsible for repayments if your business fails.
A few also consider your business credit score, though it’s not used as often. If your business has a credit score of 50 or below, you might have trouble getting a loan in some instances. But a strong personal credit score can often make up for bad business credit.
Are personal and business credit reports the same?
They aren’t. Your personal credit report is based on your history of paying back personal credit accounts, while a business credit report is based solely on credit in your business’s name.
If you’ve personally defaulted on a loan, that won’t show up on your business credit report. But business loan default could show up on your personal credit report since they typically require a personal guarantee from the owner.
Is there a minimum credit score for business loans?
No, there is no minimum credit score to get a business loan. Many providers prefer to work with borrowers that have a personal credit score of 670 or higher, which is considered good or excellent credit. But there are still options even if you have a credit score of 500 or lower.
What other factors do lenders consider?
Lenders usually look at the following factors when reviewing your loan application.
Revenue. Most lenders require you to make at least $100,000 a year to qualify for a loan.
Time in business. Often you need to be around for at least a year to meet a lender’s minimum requirements.
Cash flow. How much money does your business have after expenses each month?
Business assets. Keep tabs on the cash value of the equipment, real estate and other assets that your business owns.
Personal net worth. Review the value of each owner’s assets — like bank account balances, cars, real estate — after you subtract their debts and other liabilities.
Industry. Some lenders consider industries like finance, alcohol sales and real estate development to be high risk. This can affect your eligibility for a loan.
How to start a business with bad credit
You can get financing to start a business with bad credit by exploring a wide range of options. A business loan from a microlender might help you cover some basic costs. But you'll likely need to raise funds through other means, like crowdfunding or equity partners. That's because with startup loans, lenders often rely on your personal finances when underwriting the loan.
Reach out to a local business center in your area to go over your options. Or, if you have time before the launch, consider taking steps to improve your credit score, like paying down debt or signing up for credit counseling.
What can I do if I’ve been denied a business loan?
If you’ve been denied a business loan, ask your lender why — your credit score might only be one of the reasons your application was rejected. Online lenders typically offer less support in this area, so it might be worth setting up a meeting with a microlender or community bank. They can help you to go over your business’s finances and see where your application can use some strengthening.
4 inexpensive alternatives to bad-credit business loans
Your credit score doesn’t matter with these four business loan alternatives — which don’t come with high interest rates or fees.
Crowdfunding.Set up a campaign on a site like Kickstarter or GoFundMe to get financing for a new project. Just make sure you look into new business crowdfunding regulations.
Rollover for business startups (ROBS). This option lets you use your retirement fund to start a business without paying penalties.
Equity financing. Trade ownership for funding by bringing on investors. If an investor with good credit takes over 20% of your company, it could help your chances of getting a business loan down the line.
Grants. Businesses in underserved communities might be able to qualify for a grant from the government or a private foundation.
Recap: Best business loans for bad credit in October 2021
These lenders all offer good choices for business owners with bad credit — though some may be expensive. You can learn more about your financing options by reading our guide to business loans.
Common questions about getting a business loan with less-than-perfect credit.
How can I get a startup business loan with bad credit and no collateral?
Consider borrowing from a microlender like Kiva or Accion if you need a startup loan with bad credit and don't have collateral. Instead of requiring a high credit score or collateral, microlenders usually make sure you're invested in your community or offer training to help your business succeed. They often also offer lower rates than other types of financing that might be available, especially for startups.
Can I get a business loan with a 500 credit score?
Yes, many of the lenders we include in our list of best business loans for bad credit accept 500 credit scores. In fact, it's easier to get a business loan with a 500 credit score than a personal loan because your lender looks at factors other than your personal finances.
Options like invoice factoring and merchant cash advances also rarely check your credit. In that case, you don't need to have a credit score at all.
Which loan company is best for bad credit?
There's no one loan company that's best for bad credit. If you or one of your partners has a credit score below 580, a good way to find the best loan available to you is to compare all options available. That means talking to your local bank, looking at microlenders and also comparing online options.
Compare more business loans
Select the amount you want to borrow, your time in business, annual revenue and credit score range to compare more options you might qualify for.
Anna Serio is a trusted lending expert and certified Commercial Loan Officer who's published more than 1,000 articles on Finder to help Americans strengthen their financial literacy. A former editor of a newspaper in Beirut, Anna writes about personal, student, business and car loans. Today, digital publications like Business Insider, CNBC and the Simple Dollar feature her professional commentary, and she earned an Expert Contributor in Finance badge from review site Best Company in 2020.
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