Best Small Business Loans for Bad Credit of 2017

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If you have poor to fair credit, which is any personal credit score below 630, you’re often out of luck when it comes to getting small business loans from traditional lenders. However, many alternative and nonprofit lenders believe that credit scores are not always the most important factor to consider when lending to a business owner, and they have stepped in to fill this funding gap. To help you out, we surveyed over 30 different lenders to find the best small business loans for bad credit, and we’ve listed our top picks below.

In This Article

Best Bad Credit Small Business Loans for...
UnsecuredEquipment
StartupsWomen

Best Unsecured Business Loans for Bad Credit

Getting an unsecured business loan can be difficult, even for borrowers with great credit. However, there are several online lenders that offer unsecured business loans to borrowers who may not have perfect credit scores.

Credibly

Not only does Credibly not require specific collateral, but the lender only requires a minimum credit score of 500 to qualify, and this is why we recommend this lender. Credibly does, however, require a personal guarantee from its borrowers. To qualify for a Credibly loan, you’ll need to be in business at least six months with $10,000 in monthly revenue and bank account deposits. Depending on the type of loan you apply for, you may also need an average daily business bank account balance greater than $1,000.

You can borrow up between $5,000 and $250,000 with Credibly, and APRs normally range from 9.99% to 36%, though they may be higher if your credit score is very low. Origination fees are on Credibly loans are fixed at 2.5%. Credibly offers two loan products: a business expansion loan with terms from 18 to 24 months and a working capital loan with terms of six to 17 months. You’ll be required to make daily repayment for working capital loans and weekly repayment for business expansion loans, which -- depending on your business and its cash flow cycle -- can be a good or bad thing.

Best for: Unsecured business expansion or working capital loans.

  • 9.99% - 36% APRs
  • Terms from 6 to 24 months
  • Lenient eligibility requirements
  • Loans up to $250,000
  • Funds in as fast as 2 days

QuarterSpot

QuarterSpot is another great option for an unsecured business loan for those with lower credit scores, and it’s especially good if you already have an outstanding loan. Many traditional and online lenders won’t lend to business owners who already have an outstanding loan, but QuarterSpot will (provided you meet their eligibility criteria). QuarterSpot can also buy out one or two existing loans, and the lender only requires business owners net 20% of the loan proceeds. In comparison, many other lenders require merchants to net as high as 50% of the proceeds.

To qualify for a loan at QuarterSpot, you will need to be in business at least one year with $100,000 in annual revenue and an average daily business bank account balance of $2,000. You should also have at least 10 sales per month. You’ll also need to personally guarantee the loan, but there are no specific collateral requirements. Finally, you must have a credit score of 550 or above to qualify. You can borrow up to $150,000 through QuarterSpot with terms of nine, 12 or 18 months. APRs generally vary from 20% to 48%, though they can be lower depending on your qualifications as a borrower. You’ll be required to make daily or weekly repayment on the loan.

Best for: General purpose unsecured loans and borrowers who already have an outstanding loan.

  • 20% - 48% APRs
  • Terms of 9, 12 or 18 months
  • Lenient eligibility requirements
  • Loans up to $150,000
  • Funds in as fast as 1 day

Best Equipment Loans for Bad Credit

Even if you have poor credit, getting an equipment loan is still possible. This is because equipment loans are normally secured by the equipment you’re purchasing, so lenders may be more lenient with their credit requirements.

Currency

Two reasons that we recommend Currency for equipment financing are the lender’s competitive rates and flexible financing options. You can borrow up to $15 million through Currency, making its loans ideal for big-ticket equipment and machinery. Requirements vary depending on the type of loan you apply for, but they are less involved than what you’ll find with a bank. For instance, you’ll only need a minimum credit score of 475 to apply for a short-term loan or a cash advance, and a long-term loan requires annual revenue of $100,000 to apply. APRs range from 3% to 35%, which is lower than what many other alternative lenders offer.

If you’re a frequent eBay user, Currency offers another big advantage. The lender partners with eBay to offer financing for your purchases through the Express platform, so you don’t need to leave eBay’s website to get financing. When you apply through eBay, you can also get approved in as quickly as three minutes. If approved, Currency will handle the payment to the seller and transaction for you, making the whole transaction and financing process virtually seamless.

Best for: Big-ticket equipment purchases and financing eBay equipment purchases.

  • 3% - 35% APRs
  • Terms from 3 to 72 months
  • Lenient eligibility requirements
  • Loans up to $15 million
  • Funds in as fast as 1 day

OnDeck

Besides Currency, OnDeck offers some of the largest loan amounts with the most lenient credit requirements, making it another great choice for purchasing equipment or machinery for your business. Through OnDeck, you can borrow up to $500,000 with maturities from three to 36 months. To qualify, you’ll need to be in business at least one year with $100,000 in annual revenue, but you’ll only need a minimum credit score of 500. While APRs on OnDeck term loans start at 7.3%, only borrowers with excellent credit will qualify for these rates. The average APR for a term loan was 45% in 2015 (this is one downside to the lenient credit requirements).

A couple of things that we like about OnDeck are the insanely fast funding times and the rewards for repeat customers. Applying and getting approved for an OnDeck loan can happen in as fast as a few hours, with funding happening as quickly as one business day later. Repeat OnDeck customers in good standing can benefit from reduced fees and lower interest rates on each subsequent loan. OnDeck also reports to business credit agencies so you can build your business credit score by paying your loan on time.

  • 9.3% - 99.7% APRs
  • Terms from 3 to 36 months
  • Lenient eligibility requirements
  • Loans up to $500,000
  • Funds in as fast as 1 day

Best Startup Loans for Bad Credit

While you may think getting a loan for your startup is unlikely if you have a bad credit score, there are options available. Some nonprofit lenders cater to new entrepreneurs with limited credit history. Entrepreneurs should also consider less conventional options like invoice factoring, as factoring companies frequently have relaxed time in business and credit requirements.

Accion

Accion is great for new entrepreneurs with credit scores of at least 575. Accion offers startups loans between $1,000 to $10,000 to new businesses with interest rates starting at 10.99%. To qualify, you’ll need a minimum credit score of 575, sufficient cash flow and no bankruptcies or late payments in past 12 months. If your business is less than six months old, it will need to be home-based or in an incubator to qualify. Businesses older than six months do not have this requirement. If your startup is already partially funded, Accion also offers SBA Community Advantage loans up to $250,000. Startups must have a minimum of 20% of total costs invested with a business plan.

One reason we recommend Accion is that the lender provides a variety of resources to help you qualify for financing, including workshops and events. In the event that you’re rejected for a loan, the lender will give you the information you need to improve your application for next time, and you’ll be eligible to reapply within three to six months.

Best for: Small startup loans, and large startups loans for partially funded businesses.

  • Interest rates start at 10.99%
  • Terms from 6 to 60 months
  • Lenient eligibility requirements
  • Loans up to $250,000
  • Funds in a few weeks

BlueVine

For new businesses with demonstrated revenue, BlueVine can be a great choice to help you with cash flow gaps. BlueVine advances invoices from $20,000 to $2 million. To qualify for BlueVine, your business will need to be three months old with at least $10,000 in monthly revenue. You will also need a minimum FICO score of 530 to be eligible. One reason we like BlueVine is that the lender takes your history with them into account when determining your rates. Once you establish a positive history with the company, you may be able to have your fees and rates reduced by up to 60%.

If you advance an invoice through BlueVine, the lender will give up to 85% to 90% of the invoice amount. When your customer pays the invoice, BlueVine will give you the remaining 10% to 15% of the invoice less factoring fees. For example, if you advance a $50,000, you may receive $42,500 of it upfront. Once your customer repays, you will receive the remaining $7,500 less fees charged by BlueVine. Generally, BlueVine charges a weekly fee of 0.5% to 1% of the loan amount. In the case of the $50,000 invoice, this would amount to $250 to $500 per week.

Best for: Invoice financing for startups with demonstrated revenue.

  • 16% - 56% APRs
  • Terms up to 3 months
  • Lenient eligibility requirements
  • Invoice factoring up to $2 million
  • Funds in as fast as 1 day

Best Small Business Loans for Women with Bad Credit

Historically, female business owners and entrepreneurs have had issues getting access to capital. However, online lending has helped open up capital to borrowers who previously struggled to get financing.

Kabbage

For women entrepreneurs, Kabbage is a good choice if you have a lower credit score. According to an American Express Open study, women own a little less than half of all retail businesses, and in our opinion, a Kabbage line of credit can be a great fit for a retail business because of how the lender evaluates potential borrowers. Unlike banks or credit unions, Kabbage does not require a minimum credit score to qualify for its lines of credit up to $150,000. Instead, the lender looks at your business’s real-time data from bank accounts and other online accounts (PayPal, Amazon, Etsy, social media, etc.), so having a strong retail presence or revenue can help you get approved for a larger line.

Being in business at least one year with $50,000 in annual revenue are the basic criteria you must meet to qualify for a Kabbage line of credit up to $100,000. To qualify for up to $150,000, you'll need to be in business at least three years with $500,000 in annual revenue. You can get funds within three business days after approval, which is much faster than a typical bank loan. However, if you use PayPal, you can receive as fast as same day as loan approval, making Kabbage a solid option for PayPal merchants. While this speed does come at the cost of higher APRs from 20% to 80%, Kabbage is one of the few places you can get a line of credit if you have a low credit score.

Best for: Higher revenue businesses or businesses with strong online presence.

  • 20% - 80% APRs
  • 6- or 12-month terms
  • Lenient eligibility requirements
  • Line of credit amounts up to $100,000
  • Faster application and funding process

PayPal Working Capital

Similar to Kabbage, PayPal can be a great choice for any retail business, but only if you use the company’s payment processing services. PayPal doesn’t require a minimum credit score to apply and doesn’t even perform a credit check when you apply -- a perfect option for any business owner who has limited or shaky credit history. Instead, you’ll need to use a PayPal Business or Premier account for at least three months to qualify, and you must process at least $20,000 or $15,000 sales annually in your Premier or Business account, respectively. Since funds will be deposited to your PayPal account, funding can happen in as quickly as a few minutes.

Repayment is taken as a percentage of your daily sales (from 10% to 30% of sales), but you won’t have to repay on days you don’t make sales. There is also a fixed loan fee that you will pay when you take out the loan. This fixed loan fee is determined by the loan amount, the repayment percentage you select and your business’s PayPal history. You can borrow up to 25% of your annual PayPal sales, and up to a maximum of $97,000 on your first PayPal Working Capital loan ($125,000 is the maximum for subsequent loans). APRs are approximately 15% to 30%, and repayment is flexible, though most borrowers repay the loan within 18 months.

Best for: PayPal Business or Premier merchants.

  • 15% - 30% APRs
  • Terms up to 18 months
  • Lenient eligibility requirements
  • Loans up to $97,000 (up to 18% of your sales)
  • Funds in as fast as 1 day

Summary of Best Small Business Loans for Bad Credit

In the table below, we summarize our picks for the best small business loans for bad credit to help you make a quick comparison across lenders.

Best For...LenderRates
Unsecured business loansCredibly9.99% - 36%
QuarterSpot20% - 48%
Equipment loansCurrency3% - 35%
OnDeck9.3% - 99.7%
Business loans for womenKabbage20% - 80%
PayPal Working Capital15% - 30%
Startup business loansAccion10.99%+
BlueVine16% - 56%

How to Find the Best Small Business Loans for Bad Credit

Small business owners frequently have trouble getting funds from traditional lenders because they often cannot meet the strict requirements. Small business owners with bad credit face even more obstacles when getting financing, even from some alternative lenders. If you are able to secure a loan, you’ll typically see much higher APRs and fees. It’s important for borrowers to pay attention to rates, fees and terms when evaluating loan options for their business. Certain lenders will also require collateral or personal guarantees to secure loans. Before you agree to accept funds from a lender, be sure that you understand the terms and risks associated with the offer.

Have a Strong Business Plan and a Plan to Fix Your Credit

The best way to take advantage of a business loan if you have bad credit is to have a strong business plan with clear goals. You can get free help on your business plan through organizations such as SCORE or local business centers. You should also be making every effort to repair your bad credit, which can include paying your bills on time, cutting costs and reducing credit card usage. You can check your credit report for free once a year, so keep track of the progress you are making. It can take years to fix a damaged credit score, but actively taking steps toward improvement will benefit you and your business in the long-run.

Consider Less Traditional Options or Collateral

Besides traditional term loans and lines of credit, small business owners with bad credit should also consider other ways of getting funds such as secured small business credit cards, invoice factoring, merchant cash advances, personal loans and business grants. You may also be able to get approved for a loan or qualify for a lower rate by putting up collateral or personally guaranteeing the loan. These strategies are not without their risks, but they can be a viable option if your credit has precluded you from many loan options.

Other Small Business Loans for Bad Credit to Consider

If the options above don't fit your needs, we've compiled a list of other alternative lenders that cater to borrowers with lower credit scores or limited to no credit history.

LenderMax. Loan AmountMin. Credit ScoreRates
Fundbox$100,000None13% - 60%
SnapCap$600,00055019.99% - 49.99% (May be higher depending on FICO score)
Dealstruck$500,000
StreetShares$100,0006008% - 39.99%
Lending Club$300,0006207.77% - 35.11%
Fundation$500,0006207.99% - 29.99%
Funding Circle$500,0006207.35% - 33%
Bond Street$1 million6408% - 25%

How We Picked the Best Small Business Loans for Bad Credit

In our review of small business loans, we considered the following criteria:

  • Reasonable interest rates: When it comes to business financing, getting a good interest rate on a loan is crucial, and it pays to shop around. We looked for lenders that offered reasonable interest rates based on the credit profile of borrowers (in this case, borrowers with poor to fair credit). In general, borrowers with poor credit won't qualify for the same APRs as creditworthy borrowers, but they still shouldn't be paying exorbitant interest on a loan.
  • Transparent eligibility requirements: Because applying for a loan can affect your credit score, it's important to know if you are eligible before applying. Otherwise, it's a waste of your time. We looked for lenders that offered specific criteria on the types of businesses and owners they lend to.
  • Range of loan terms: Do the lenders offer a range of loan amounts and terms? Businesses need to borrow different amounts based on the planned use of funds. Depending on a business's cash flow cycle, a shorter or longer maturity may be better.
  • Few restrictions on loan use: With the exception of commercial real estate loans, we looked for general purpose loans that businesse could use for equipment or machinery purchases, working capital, inventory or other needs. Being able to use funds flexibly and as needed makes a loan a more attractive option for many business owners.
  • Time to receive funds: We looked for lenders that either offered quick funding time or were transparent about how long funding takes. Many lenders now understand the importance of getting funds to businesses quickly, so we favored lenders that offered quick approval and funding times.
  • Ease of application process: In the past, bank and SBA loans were notorious for lengthy application processes, but as lending has moved online, borrowers are looking for loan applications that are easy to complete. Online lenders typically fit this bill, though banks and the SBA have started offering streamlined application processes.
  • Lender reputation: With the rise of online lending, it's easier than ever for a business owner to get a loan from a less reputable source -- and that’s a problem. While many online lenders are credible, we looked for lenders that had positive review or BBB ratings and had been in business at least several years.

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