If your credit score is under 620, you may struggle to qualify for traditional business loans. The good news is that many lenders offer bad credit financing options, including merchant cash advances, invoice factoring, lines of credit and microloans. As long as you have sufficient revenue and time in business, you may qualify.
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 it reflects the most competitive deals available to small business owners with bad credit.
We weigh lenders and financing companies against these factors:
Credit score requirements
Time-in-business requirements
Annual revenue requirements
APRs
Fees, such as origination fees
Loan amounts
Repayment terms
Turnaround time
State availability
Application process
Lender reputation and customer reviews
Can I get a business loan with bad credit?
Getting a business loan with bad credit is possible. Most lenders define bad credit as a personal score below 580, but many are willing to look beyond your credit score. Instead, they often focus on factors like monthly revenue, cash flow and time in business. In many cases, lenders want to see consistent revenue of roughly $3,000 to $15,000 per month.
According to the Small Business Credit Survey (SBCS), approval rates for business financing have largely rebounded from pandemic levels, with about 80% of applicants receiving at least partial approval. This data suggests access to funding has improved compared to the immediate post-pandemic years, even for businesses without perfect credit.
How to compare business loans for bad credit
Compare these key factors to find the best deal for your business needs.
Interest rates. Rates vary significantly depending on the lender and loan type and are typically higher if you have poor credit. Compare multiple lenders to find the lowest rates for your situation.
Fees. Some loan options for borrowers with poor credit charge fees instead of interest, which can make it more difficult to compare the loan’s total cost with other options. You may also be on the hook for interest and fees.
Loan terms. In general, bad-credit business loans tend to have short terms and may also include weekly or daily repayments. Check your budget before you apply to be sure the repayments are affordable and manageable.
Lender requirements. Check lenders’ minimum credit score requirements to make sure they work with borrowers in your range. You’ll typically also need to meet revenue and time-in-business requirements.
Turnaround time. Depending on how soon you need the capital, online lenders are usually the quickest option. Banks and credit unions generally take longer and often won’t consider borrowers with poor credit.
What is a bad-credit business loan
Bad credit business loans are financing options designed for business owners with lower credit scores. Instead of focusing heavily on your credit history, these lenders often look at the bigger picture, your revenue, monthly cash flow and how long you’ve been in business.
Because of that flexibility, bad credit financing can show up in a few different forms, including:
Term loans and business lines of credit with more relaxed credit requirements
Secured loans, such as equipment financing, where the asset helps offset the risk
The tradeoff is that these loans can be more expensive. But if you need access to capital and your credit is holding you back, they can still be a workable option.
Pros and cons of bad-credit business loans
Consider the benefits and drawbacks of getting a business loan for bad credit.
Pros
Multiple loan options. Even if your credit is poor, there are plenty of types of business financing available, including MCAs, credit lines and invoice factoring.
Fast funding. Online lenders, which provide the most options for bad credit, typically offer funding within days rather than weeks, and some even provide same-day financing.
May build credit. Not all, but some loans for bad credit can help you build business credit and qualify for more competitive rates down the road.
Cons
Higher rates and fees. Your credit score is a key factor in determining how affordable business financing is.
Smaller loans. Borrowers with poor credit typically won't have access to the largest loan amounts and, in some cases, may not qualify for as much as they need.
Additional requirements. If your credit isn't great, lenders may have extra criteria you'll need to meet to qualify. For example, you may have to put up collateral or get a cosigner.
Fewer loan options. While there are multiple loan options when you have bad credit, there aren't as many choices as there are for borrowers with a tip-top credit profile.
We currently don't have that product, but here are others to consider:
Looking for other options? Check out these similar products.
How we picked these
What is the Finder Score?
The Finder Score crunches 12+ types of business loans across 35+ lenders. It takes into account the product's interest rate, fees and features, as well as the type of loan eg investor, variable, fixed rate - this gives you a simple score out of 10.
To provide a Score, we compare like-for-like loans. So if you're comparing the best business loans for startups loans, you can see how each business loan stacks up against other business loans with the same borrower type, rate type and repayment type.
How to qualify for a small business loan with bad credit
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 for, 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 two years 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.
How to get a bad-credit business loan
Even with poor credit, there are ways to increase your approval odds — luck favors the prepared.
Check your credit. Before you apply, 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.
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.
Compare loan types. Research the types of loans you might qualify for to see which one makes the most sense for your business.
Compare multiple lenders. Once you’ve narrowed down the best loan for your business, compare several different providers to find the best deal. If possible, ask to prequalify to get an idea of the rates you might pay.
Apply. Fill out the loan application, submit your documentation and wait for a decision. Many online lenders offer same-day decisions.
Where to get a business loan with bad credit
Any financial institution that offers business loans is a potential lender for borrowers with bad credit — particularly if you meet other qualifications — but some are better than others.
Large national or regional banks. Large banks like Wells Fargo, Chase, TD Bank and Huntington Bank typically offer competitive rates, but they’re more likely to have stricter credit requirements than other lenders.
Local banks and credit unions. Small local banks and credit unions may be willing to work with borrowers that have less-than-perfect credit, especially if you have an existing relationship with them.
Online lenders. Most online lenders are fintech companies — not banks — and they typically have more lenient requirements to qualify for business loans. These lenders are usually the best option for bad-credit business loans, but rates and fees can be steep.
Community Development Financial Institutions (CDFIs). CDFIs can be banks, credit unions, loans funds or venture capital providers that specialize in funding underserved communities. If your business is in a rural or low-income area, you may be able to qualify for Community Development Financial Institution (CDFI) funding even if you don’t have the best credit.
Connection services or loan marketplaces. Loan marketplaces, such as Lendio, can help you compare multiple lenders at once, often within minutes, using a single application and a soft credit check.
Alternatives to bad credit business loans
Your credit score doesn’t matter with these 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. However, ROBS can be risky, so you may want to seek professional help if you decide to take this route.
Equity financing. Business equity financing involves 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.
One of the easiest business loans to get with bad credit is equipment financing because the equipment acts as collateral for the loan. This makes it less risky for the lender.
Business owners with bad credit may also qualify for short-term financing like merchant cash advances or invoice factoring, because those options rely more on your sales or accounts receivables than your credit.
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 review your business's finances and see where your application can use some strengthening. Or consider a financing alternative.
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.
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 most business loans require a personal guarantee from all owners, which means they're responsible for repayments if the business fails.
Lacey Stark is a freelance personal finance writer for Finder, specializing
in banking, loans, investing, estate planning, and more. She has 20
years of experience writing and editing for magazines, newspapers, and
online publications. A word nerd from childhood, Lacey officially got her
start reporting on live sporting events and moved on to cover topics
such as construction, technology, and travel before finding her niche in
personal finance. Originally from New England, she received her
bachelor’s degree from the University of Denver and completed a
postgraduate journalism program at Metropolitan State University also
in Denver. She currently lives in Chicagoland with her dog Chunk and
likes to read and play golf.
See full bio
Compare the best business cash flow loans in 2023.
Advertiser disclosure
Finder.com is an independent comparison platform and information service that aims to provide you with the tools you need to make better decisions. While we are independent, the offers that appear on this site are from companies from which Finder receives compensation. We may receive compensation from our partners for placement of their products or services. We may also receive compensation if you click on certain links posted on our site. While compensation arrangements may affect the order, position or placement of product information, it doesn't influence our assessment of those products. Please don't interpret the order in which products appear on our Site as any endorsement or recommendation from us. Finder compares a wide range of products, providers and services but we don't provide information on all available products, providers or services. Please appreciate that there may be other options available to you than the products, providers or services covered by our service.
We update our data regularly, but information can change between updates. Confirm details with the provider you're interested in before making a decision.
