Best startup business loans for bad credit in 2021 | finder.com

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Best startup business loans for bad credit

New businesses can find funding with one of these eight options.

Editor's choice: Lendio business loans

  • Network of over 300 lenders
  • 10 types of financing available
  • Positive reviews of customer service
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Traditional lenders like banks — and many online lenders — make it hard to get financing when you have a freshly opened business and bad credit. Luckily, these aren't your only options. There are some online lenders and accessible alternatives to business loans that you could qualify for as a startup.

We compiled a list of eight top options to consider for your startup. All accept business owners with bad credit, typically scores between 500 to 600. And they all work with businesses that are less than a year old, although most require you to have been in business for at least six months.

But expect higher costs. These lenders tend to have higher interest rates to offset the risk of working with new businesses and owners with bad credit scores. While your startup may qualify for funding, make sure you can afford to pay before taking on any additional debt.

8 best business startup loans for bad credit

Lendio business loans logo
Finder Rating: 4.75 / 5

★★★★★

Check eligibility

on Lendio business loans’s secure site

Best for finding a lender quickly: Lendio business loans

560
Min. Credit Score
18 months
Min. time in business
$18,000
Min. revenue

Lendio has a network of over 75 lenders that offer a wide variety of business loans. The lenders in its network don’t have a set minimum time in business requirement, and you may qualify with a score as low as 560. However, you’ll need at least six months of business bank statements to complete its online form.

  • Large network
  • 10 financing options
  • Positive customer reviews
  • Total cost varies by lender
  • May receive marketing material
Min. Loan Amount $500
Max. Loan Amount $5,000,000
APR Starting at 6%
Interest Rate Type Variable
Min. Credit Score 560
Minimum Loan Term 12 months
Maximum Loan Term 300 months

Best for unsecured loans: SBG Funding small business term loans

500
Min. Credit Score
6 months
Min. time in business
$150,000
Min. revenue

SBG Funding is one of the few lenders that accepts borrowers with scores as low as 500. Its loans are unsecured — but you may only qualify for short-term products, which can be pricey. And like most lenders, you must have at least six months in business and decent annual revenue to qualify.

  • Low credit score of 500 accepted
  • High-risk industries OK
  • Short loan term of six months available
  • Slower funding speed than other lenders
  • Potential weekly payments
  • Fees not disclosed
Min. Loan Amount $5,000
Max. Loan Amount $5,000,000
APR 5% to 35%
Interest Rate Type Fixed
Min. Credit Score 500
Minimum Loan Term 6 months
Maximum Loan Term 60 months
Turnaround Time As soon as 3 business days
Fundbox business loans logo
Finder Rating: 4.76 / 5

★★★★★

Check eligibility

on Fundbox business loans’s secure site

Best for lines of credit: Fundbox business loans

600
Min. Credit Score
2 months
Min. time in business
$50,000
Min. revenue

Best for lines of credit” DESC=”Fundbox offers short-term lines of credit to relatively new startups. And while it does have a higher minimum personal credit score requirement of 600, you might be eligible with a lower annual revenue of just $100,000. Its lines of credit are a flexible way to fund your startup, but costs can add up — especially with terms of just 12 to 24 weeks.

  • Low annual revenue requirement of $100,000
  • No draw fees
  • Small loans of $1,000 available
  • Weekly payments required
  • Each draw treated as separate loan
  • Minimum credit score of 600
Min. Loan Amount $1,000
Max. Loan Amount $150,000
APR 4.99%
Interest Rate Type Fixed
Min. Credit Score 600
Turnaround Time As soon as 1 business day

Best for microloans: Kiva business loans

None
Min. Credit Score
Not required
Min. time in business
Not required
Min. revenue

Kiva is part microloan, part crowdfunding platform. Rather than lend directly to your startup, you set up a campaign for donations. There’s no interest, and you don’t have to meet a minimum credit score. However, if you don’t have a large social network, you might not get the funding you need.

  • No minimum credit score requirement
  • No fees or interest
  • Small loans of just $25 available
  • Must repay crowdfunded loan
  • Low maximum loan amount of $15,000
  • Turnaround of up to 45 days
Min. Loan Amount $25
Max. Loan Amount $15,000
APR 0%
Interest Rate Type N/A
Minimum Loan Term 1 months
Maximum Loan Term 3 months
Credibly business loans logo
Finder Rating: 3.8 / 5

★★★★★

Check eligibility

on Credibly business loans’s secure site

Best for short-term business loans: Credibly business loans

550
Min. Credit Score
6 months
Min. time in business
$180,000
Min. revenue

Credibly offers short-term working capital loans and merchant cash advances to startups. These can be expensive, but you could qualify with a credit score of just 500. And it offers same-day funding once you’re approved — not common with most lenders.

  • Wide range of funding options
  • High-risk industries OK
  • Short loan term of six months available
  • Daily or weekly payments
  • Annual revenue requirement of $180,000
  • High fees
Min. Loan Amount $5,000
Max. Loan Amount $400,000
Interest Rate Type Variable
Min. Credit Score 550
Minimum Loan Term 6 months
Maximum Loan Term 18 months

Best for home businesses: Accion business loans

575
Min. Credit Score
6 months
Min. time in business
Not required
Min. revenue

Accion is another microlender that works with startups. Specifically, it works with businesses based out of homes or in an incubator. It does have a higher credit score requirement than some of our other top picks, but 575 is still lower than most other lenders accept.

  • Maximum APR of 22%
  • Specializes in home businesses
  • Small loans of $300 available
  • Not upfront about potential fees
  • History of poor customer service
  • May have slow funding time
Min. Loan Amount $300
Max. Loan Amount $250,000
APR 10.99% to 22%
Fee 4% to 5%
Interest Rate Type Fixed
Min. Credit Score 575
Minimum Loan Term 6 months
Maximum Loan Term 60 months

Best for e-commerce businesses: Kickpay e-commerce business loans

None
Min. Credit Score
3 months
Min. time in business
$250,000
Min. revenue

Kickpay specializes in e-commerce businesses. You may qualify for funding if you have just three months of sales history. However, you’ll need to borrow at least $20,000, meet a high annual revenue requirement and pay everything back in just 16 weeks. You’ll also need to use a fulfillment center to process your orders.

  • Full support for e-commerce businesses
  • Only three months of sales history required
  • No personal guarantees
  • High annual revenue requirement of $250,000
  • High minimum loan amount of $20,000
  • Short loan term of 16 weeks
Min. Loan Amount $20,000
Max. Loan Amount $1,000,000
APR Not applicable
Interest Rate Type Fixed
Turnaround Time 8 to 12 days

Best for using retirement savings: My Solo 401k Financial business financing plans

None
Min. Credit Score
Not required
Min. time in business
Not required
Min. revenue

My Solo 401k offers Rollover for Business Startups (ROBS). These allow you to use your retirement savings to start a business — with no credit check. But while it can be useful, you’re risking your savings. You’re also on the hook for setup fees and annual fees, though My Solo 401k is less expensive than similar products.

  • Helps with business setup and taxes
  • No credit check
  • Discounts for veterans
  • Risks retirement savings
  • Higher annual cost for fast-growing businesses
  • Slower funding time
Interest Rate Type N/A

Summary of best business startup loans for bad credit

Not sure where to start? Here's our quick overview of the three most important requirements: minimum credit score, time in business and minimum revenue.

Lendio

560
18+ months

$18,000

SBG Funding

500+
6 months

$150,000

Fundbox

600
Must have been in business for at least 6 months.

$50,000

Kiva

500+
6 months

$150,000

Credibly

550
6 months

$180,000

Accion

575
6 months

Not required

Kickpay

None
3 months of sales history

$250,000

My Solo 401k Financial

None
Not required

Not required

How to get a business loan with bad credit

There are options if you have bad credit – but they're limited. A few of the lenders we included on our list accept borrowers with credit scores of 500, and many more accept borrowers with credit scores between 500 to 600.

Here are three basic steps to getting a business loan without the best credit.

  1. Know your credit score. Knowing your exact credit score will help you narrow down potential lenders you qualify for.
  2. Research lenders and loan options. There are a variety of lenders and loan options that work with bad credit. Use our top picks as a starting point, but be sure to research more ways to finance your business
  3. Perfect your business plan. Every lender will want to know how you plan on using your funds and how a loan will help your business, especially when you're just starting out.

You're unlikely to qualify for SBA loans and big bank loans. The SBA and banks have strict requirements that your business will need to meet, and you'll need to have fair personal credit to qualify for most major forms of financing.

However, you may be able to qualify for other loans if you provide collateral or have a cosigner to back you — as long as you also have the means to make payments on your new loan. And in any case, you'll likely have to provide a personal guarantee.

How to choose the best lender for your business

Even the best lenders aren't right for every business. Consider these five points when comparing your options:

  • Invoice factoring. Invoice factoring allows you to sell your invoices at a discount. You can access the money from your invoices quickly — without waiting for your client to pay — so you can keep your cash flow regular.
  • Crowdfunding. If you have a large social network and a good business plan, crowdfunding may be a way to build interest in your business while receiving funding. This is especially useful if you haven't opened up shop.
  • Personal loans. In most cases, you may only qualify for bad credit personal loans. But you can use your funds for business expenses — even if you haven't officially started.
  • Equipment financing. Equipment financing may allow you to buy necessary equipment and supplies for your business. Because these are secured loans, your credit score may not be as big of a factor for some lenders.

How to improve your personal credit score

Bottom line

There are options for startups and options for business owners with bad credit. These are the best options for borrowers who fall into both categories. But before you apply for financing, read our guide to business loans to familiarize yourself with the most important details of funding your startup.

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