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Best business loans and financing for bad credit

Microloans and short-term loans are worth considering if you have a low credit score.

If your credit score is under 620, you may struggle to qualify for traditional business loans or financing. There are other options to consider, though, such as merchant cash advances, microloans or short-term loans. And you could look into crowdfunding for a less expensive funding method that doesn’t consider your credit score.

With a lower credit score, you may have to plan on higher interest rates, extra fees or a more extensive application. Compare your lending options and loan providers down to the smallest details to find the best loan within your budget.

8 best business financing options for bad credit

Best overall

Accion Opportunity Fund business loans

Finder Rating: 3.6 / 5 ★★★★★

Accion is a nonprofit microlender that offers loans from $5,000 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 18.99%. 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.

Best marketplace

Lendio business loans

Finder Rating: 4.75 / 5 ★★★★★

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 you may receive marketing calls and emails from lenders long after you’ve taken out a loan.

Best invoice financing

FundThrough Invoice Factoring and Financing

Finder Rating: 4.5 / 5 ★★★★★

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.

Best term loan

SBG Funding small business term loans

Finder Rating: 4.2 / 5 ★★★★★

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.

Best short-term loan

LoanBuilder business loans

Finder Rating: 4.24 / 5 ★★★★★

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 of 6.49% to 19.31% that's low compared to other similar products — though it's more costly than a standard business loan.

Best microloan

Kiva business loans

Finder Rating: 3.7 / 5 ★★★★★

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 is allowing borrowers to request a six-month grace period before payments are due.

Best inventory financing

Kickpay e-commerce business loans

Finder Rating: 3.9 / 5 ★★★★★

Kickpay offers low-cost inventory loans to help e-commerce startups purchase inventory. It charges a low fee of 3% to 7% of the manufacturing cost. 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.

Best merchant cash advance

Credibly business financing

Finder Rating: 3.8 / 5 ★★★★★

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 1.09. 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.

Methodology: How we picked these providers

Finder’s editorial experts review over 220 business loan providers to narrow down our selection for the best business loans and financing options for bad credit. We analyze factors such as minimum credit requirements, rates, fees and customer reviews. We also consider the overall approval rates for the different types of financing that we selected.

We update this list regularly, as products change, emerge or disappear from the business financing market. We also revise this list regularly to ensure this list reflects the most competitive deals available to small business owners with bad credit.

Can I get a business loan with bad credit?

Yes, it’s possible to get a business loan or type of business financing with poor credit — what we at Finder define as a personal credit score below 580. Lenders have varying credit score requirements and differing opinions on what bad credit is: Some consider anything below 670 to be bad credit.

And while there are bad credit options, you may struggle to qualify for the full amount you apply for through a traditional lender. In fact, the Federal Reserve found that only 8% of applicants in the high credit risk category received the full amount of financing that they sought, according to its 2022 Small Business Credit Survey. In this survey, the federal reserve defines poor credit as 620 and lower, meaning that even some fair credit borrowers struggled to receive the amount they applied for.

It’s worth noting that business financing approval rates are down overall. In 2019 as many as 83% of all business loan applicants received a portion of the financing they applied for — falling to 68% in 2021. When rates are high, bad credit borrowers are often squeezed out of the credit market.

6 steps to get a business loan with bad credit

No doubt, the last few years have affected approval rates and funding amounts. But even with poor credit, there are ways to increase your approval odds — luck favors the prepared.

Step 1: Check your credit to know where you stand.

Before you apply for any business financing or loan options, check your FICO Score and credit bureau reports. Knowing this information will help you find lenders that can work within your credit range. It also gives you the chance to correct any mistakes on your credit report.

Additionally, the details behind a poor credit score can mean the difference between further consideration or an outright denial. Lenders will review your credit reports and may ask for clarification on specific negative marks. A lower credit score due to one missed payment is likely to be viewed very differently than a past bankruptcy.

Step 2: Have a strong business plan.

A strong business plan lets you make a case for your business beyond what lenders consider on the application and can increase your chances of approval. The type of business you have — or plan to have — also plays into whether a lender approves you, as some businesses are riskier than others.

Step 3: Find your strengths.

Identify the area where your business does best to match with a lender that rewards that strength — like earning high revenue or number of years in business.

Many loan products aren’t as reliant on credit scores as others. For example, merchant cash advances and invoice factoring are less dependent on credit history because those lending options are mostly based on sales. Equipment financing is also less reliant on your credit reports since the equipment you’re financing is typically collateral on the loan.

But be careful when applying for a business loan alternative. They can come with fees equivalent to a 300% APR or higher.

Step 4: Pick the right time to apply.

There are several considerations on when to apply for a business loan. For starters, many business loan providers require at least 12 to 24 months in business to meet requirements. So if you’re a startup, you may have to look at alternatives.

Business loan marketplace Fora Financial suggests the most beneficial times to request funds include: the holiday season, busy season, slow season or right before introducing a new product or service. It’s often recommended to apply during the holiday season or busy season, since your revenue will be at its peak.

During the slow season or right before a new release, you may need extra cash flow to cover expenses, payroll, advertising or hiring new staff. Typically, increased cash flow during slow times is helpful ahead of the busy season or demand for a new service.

Step 5: Compare a wide range of lenders.

Compare and consider various lenders, loans and funding types like merchant cash advances, crowdfunding, invoice factoring and equipment financing. Many business lenders and financing companies offer quotes based on a quick look at your business’s finances and a soft credit check.

If you decide to apply with multiple lenders to compare rates and terms, try to do so within a small time period, ideally within 30 days, as recommended by the credit scoring model FICO. This is called rate shopping, and it limits the damage to your credit score from hard inquiries. FICO can distinguish between borrowers comparing lenders for one type of loan, and borrowers looking to take on multiple new credit lines.

Connection services can help speed up comparisons

A connection service, or loan marketplace, can allow you to compare multiple lenders of a specific type in a short time — often within minutes after completing an online form with a soft credit check. Some popular business loan marketplaces include Credibly, LendingTree, Lendio and Rok Financial.

However, some marketplaces may sell your information to third parties, and you may receive marketing materials via email, phone or mail from those parties.

Step 6: Set up a meeting at a community bank.

Small banks can be a great resource for business owners with bad credit. Due to their small size, community banks have more flexible credit requirements than regional or national banks. If you have a good reason for your bad credit — like a divorce — they may be able to offer a loan even if you have bad credit.

Even if you can’t qualify for a loan, a loan officer may be able to point you toward other financing options — and give tips on how to improve your application next time.

Typical requirements for a small business loan

If you have bad credit, your business may qualify for a loan if it exceeds the lender’s other minimum requirements. Lenders will vary and their exact requirements will depend on the type of loan you’re looking to get, but typically you must meet the following criteria:

  • At least $100,000 in annual revenue
  • At least 12 months in business
  • Eligible industry

Time in business is a priority requirement for many lenders, with some requiring at least 24 months to qualify. For this reason, it can be difficult for startups to wrangle up funding.

Your industry matters, too. Some lenders consider adult entertainment, alcohol sales, cannabis, crypto, finance and real estate development high-risk industries and ineligible for funding.

Do lenders consider personal or business credit scores?

Lenders almost always check your personal credit score and rarely check your business credit score, even if you’ve set up an LLC to separate your personal and business finances. 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. Because creditors rarely use business credit scores, many lenders find them unreliable.

Loan providers usually look at the personal credit of all business owners — anyone with more than a 20% stake in the company. That’s because business loans require a personal guarantee from all owners, which means they’re responsible for repayments if the business fails.

There’s no minimum credit score to get a business loan. But many providers do prefer to work with borrowers that have a personal credit score of 670 or higher, but there are still options even if you have a credit score of 500 or lower.

Where to get a business loan with bad credit

Nearly half of all companies use large banks for business funding — but only 47% of applicants are approved according to the SBCS.

Online lenders, small banks and finance companies have higher approval rates, so if you have a poor credit score those lenders may be a safer bet.

Online lender

Online lenders are often fintech companies, and tend to have streamlined underwriting processes. They may look at different factors than traditional lenders and can be more willing to work with poor credit borrowers compared to other traditional lenders.

These lenders typically feature low-document applications, since many can connect with your business’s bank account or accounting software for a seamless underwriting process. 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.

Online lenders have a 55% approval rate, as reported by SBCS. Historically, online lenders have had higher approval rate but it’s notably decreased since COVID.

Financial service company

More of an umbrella term, finance companies include a number of nonbank lenders such as mortgage companies, equipment dealers, insurance companies or auto finance companies.

Overall, finance companies have a 69% approval rate, according to the SBCS.

Community bank and credit union

Community banks and credit unions typically require you to sit down with a loan officer to discuss your options. They’re also known for competitive rates. 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 — such as student loans — your lender might be willing to make an exception to its credit score policy.

Small banks and community banks have a 66% approval rate, the SBCS reports.

Asset-based lender

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 use collateral you already own, not real estate or equipment you use the loan to purchase.

Usually these lenders also work with businesses that lack the cash flow to qualify for a loan at a local bank or credit union.

Merchant cash advance and factoring company

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.

What’s the easiest business loan to get?

The easiest business loan to qualify for is equipment financing, according to the Federal Reserve’s 2021 Small Business Credit Survey. 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.

What can I do if my application is denied?

If you’re 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, community bank or small business development center. They can help you to go over your business’s finances and see where your application can use some strengthening. Or, consider a financing alternative.

4 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. Sites like Kickstarter or GoFundMe allow you to set up a campaign to get financing for a new project. But make sure you look into new business crowdfunding regulations.
  • Rollover for business startups (ROBS). ROBS can let you use your retirement fund to start a business without paying penalties.
  • Equity financing. Similar to home equity loans, business equity financing is trading 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, and there are grants available for startups too.

Learn more about your financing options by reading our guide to business loans.

Compare more business loans

1 - 6 of 6
Name Product Filter Values Min. Amount Max. Amount APR Requirements
Lendio business loans
Finder Rating: 4.75 / 5: ★★★★★
Lendio business loans
Starting at 3%
Operate business in US or Canada for 6 months or more, have a business bank account, 560 personal credit score, at least $8,000 in monthly revenue
Submit one simple application to potentially get offers from a network of over 300 legit business lenders.
Not rated yet
Starting from 2%
550+ credit score, at least one year in business, $240,000+ annual revenue
Apply within minutes without impacting your credit score.
Finder Rating: 4.38 / 5: ★★★★★
Varies by loan type and lender
Must have been in business between 1–2 years, have a minimum revenue of $75,000–$250,000 and have a minimum credit score of 500–650.
Complete a three-minute form to see loans that fit your business’s needs. Compare offers without a hard credit check.
National Business Capital business loans
Finder Rating: 4.3 / 5: ★★★★★
National Business Capital business loans
1+ Year in Business, $500,000 in Annual Revenue, US citizen or permanent resident
Find a loan to match your business needs with an advisor to help you navigate through the process.
OnDeck short-term loans
Finder Rating: 4.6 / 5: ★★★★★
OnDeck short-term loans
29.9% to 65.9%
Companies in business at least 1 year, $100,000+ in gross annual revenue, majority owner with a 625+ personal credit score, active business checking account
Receive flexible financing at competitive fixed rates from this A+ rated business lender.
Finder Rating: 4.6 / 5: ★★★★★
Starting at 1%
600+ personal credit score, 1+ years time in business, $140,000+ minimum annual revenue, active business checking account required
Prequalify with this lending marketplace using an easy application process. Plus, work with real loan experts to make the best decisions on loan programs for ERC, SBA, e-commerce, cannabis and other loan categories.

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