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Best startup business loans for bad credit

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

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

Best for finding a lender quickly

Lendio business loans


Finder rating 4.75 / 5
★★★★★

Go to site

on Lendio's secure website

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.

Best for unsecured loans

SBG Funding small business term loans


Finder rating 4.2 / 5
★★★★★

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.

Best for lines of credit

Fundbox lines of credit


Finder rating 4.2 / 5
★★★★★

Go to site

on Fundbox's secure website

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.

Best for microloans

Kiva business loans


Finder rating 3.7 / 5
★★★★★

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.

Best for short-term business loans

Credibly business loans


Finder rating 3.8 / 5
★★★★★

Go to site

on Credibly's secure website

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.

Best for home businesses

Accion Opportunity Fund business loans


Finder rating 3.6 / 5
★★★★★

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.

Best for e-commerce businesses

Kickpay e-commerce business loans


Finder rating 3.7 / 5
★★★★★

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.

Best for using retirement savings

My Solo 401k Financial business financing plans


Finder rating 4.7 / 5
★★★★★

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.

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

500
6 months

$180,000

Accion

Not stated
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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