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Best business loans for fair credit
Lenders won't reject you outright just because you don't have the best score.
Best business loans for fair credit
OnDeck Business Loan
|Interest Rate||9.99% – 29.00%|
|Loan Amount||$5,000 - $300,000|
|Loan Term||6 - 18 months|
Loans Canada Business Loan
|Interest Rate||6.60% - 29.00%|
|Loan Amount||$4,000 - $500,000|
|Loan Term||3 - 60 months|
iCapital business loan
|Interest Rate||From 9.99%|
|Loan Amount||From 9.99%|
|Loan Term||12 to 120 months|
Merchant Growth Business Loan
|Interest Rate||12.99% - 39.99%|
|Loan Amount||$5,000 - $500,000|
|Loan Term||3 - 12 months|
How we picked the best business lenders
These lenders represent some of the more flexible and transparent options available to borrowers with fair credit. To compile our list, we considered the loan types available, minimum and maximum APR, repayment terms and the loan amount.
Other business loans you can apply for today
Where can I find a lender that accepts fair credit?
If you have fair credit, you may be able to qualify for a business loan from a variety of lenders.
Lenders that operate online offer a wide range of loans for borrowers with fair credit. These include standard term loans and lines of credit — with rates comparable to banks — and short-term options like invoice financing, invoice factoring and merchant cash advances.
Because of all the options available, it’s important to compare lenders carefully. Fortunately, online lenders typically have lower credit requirements and are more lenient than banks, which can make it easier to qualify for a loan with fair credit.
Some banks accept business owners with fair credit — provided they have an established credit history. Rates at banks are generally lower, and you may have access to experienced bankers that understand your industry.
But most banks require you to have a chequing account or visit a branch to apply. You’ll also need to meet other strict requirements to qualify, so expect the process of applying with a bank to take longer than an online lender.
Local and regional credit unions generally offer term loans to business members, although you may find other options with your credit union. Requirements tend to be more lenient than banks, but you will still need to meet a minimum credit score to apply.
And like banks, you may need to fill out your paperwork at a branch — though more and more credit unions are moving their initial application process online. Rates are also competitive, but you will need to become a member to qualify for most financing options.
Alternative lenders should be used as a last resort if you or your business are unable to qualify for a loan from another source. Because of the fixed-fee structure, alternative loans require daily repayments and may be much more expensive than other loan options. You should consider an alternative business loan carefully before borrowing.
How do I get a business loan with fair credit?
You can improve your chances of approval by keeping these points in mind:
- Develop a business plan. You should be able to demonstrate why you need funding through a strong business plan. It should show a lender that you know how your funds will be used and how you plan on repaying what your business borrows.
- Check your credit report. If there are any mistakes on your credit report, you should have them fixed before applying for a business loan — especially if your payment history is incorrect.
- Gather your paperwork. Lenders want to see tax returns and proof of revenue at minimum. Each application process is different, but you can check with your lenders to ensure you have the documents you need before you apply.
- Pick the right time. If you’re able, apply during your busy season when you have a few months of strong revenue. This will show your lender that your business is doing well.
- Prequalify — if possible. Not all lenders offer a prequalification option. But if you can, check your rates with your top choices to avoid a hit to your credit.
Once you have a few prequalification offers, compare the APR, payment schedule and terms to choose the best choice for your business.
6 alternatives to fair credit business loans
These alternatives won’t fault you for having fair credit. But some choices can be expensive for businesses with low revenue.
- Short-term business loans. Short-term business loans are an expensive alternative to term loans. However, borrowers with fair credit may qualify for lower rates. So if you don’t qualify for a traditional term loan, a short-term business loan could be a good alternative.
- Equity financing. Equity financing involves selling partial ownership of your company to an investor. This can take multiple forms, including crowdfunding. Under some circumstances, your investor’s good credit could improve your chances of qualifying for a business loan later.
- Grants. There are federal, provincial and private grants available to businesses that work in specific sectors, employ specific groups of people or serve underserved communities. Your credit score won’t matter since you don’t have to repay your grant funds.
- Business credit cards. These can be used to finance smaller purchases if your business can handle the high APR. There are even business credit cards for owners with fair credit that may be easier to qualify for.
- Personal loans. As a last resort, there are personal loans you can qualify for with fair credit. These won’t offer the best rates, but they can often be used to finance your business.
What should I do if I was denied a business loan?
Your lender should provide information on why you weren’t approved for a loan. Revisit your application and ensure neither you nor your lender made any mistakes. If everything is correct, review the reason you were rejected. Even if you meet a lender’s minimum credit requirements, your business’s revenue and financial history may not meet the lender’s standards.
Rework your application and business plan to suit the feedback you received. If the problem is with your revenue, sales or other metrics, it may be better to consider alternative sources of financing — including short-term business loans, personal loans or business credit cards — which may be easier to qualify for.
Fair credit won’t stop you from qualifying for one of these top business loans. But you should still explore your full range of options to ensure you’re making the right financial move for your business. Learn more about how to improve your business credit here.
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