Compare Small Business Loans
Bad credit business loans may seem impossible to find, but there are online lenders that provide business loans and financing options with low credit score minimums. FICO defines poor credit as a score below 580 — and lenders on our list consider scores as low as 500. They may, however, charge higher interest rates and, like most lenders, take a close look at your time in business, revenue and other criteria.
Best business loans for bad credit in 2021
ValuePenguin examined over 10 lenders to develop our list of the best business loans for borrowers with bad credit. Top lenders providing small business funding to borrowers with bad credit require a minimum credit score no higher than 600, have transparent rates and terms and are available to a wide variety of business owners.
Minimum credit score
|Fora Financial||500||Up to 15 months||Factor rates from 1.1-1.35||$500,000||High loan amounts with lenient requirements|
|Credibly||500||6 - 18 months||Factor rates from 1.15||$400,000||Fast approvals and funding|
|OnDeck||600||Up to $250,000 months||Starting from 35% APR||$250,000||Loyalty benefits|
|BlueVine||600||6 to 12 months||Starting from 4.8%||$250,000||Low interest rate business financing|
|Fundbox||600||12 - 24 weeks for line of credit; 24 or 52 weeks for term loan||Average 8.33% for 24-week terms and 18% for 52-week terms||$150,000||No application, origination or prepayment fees|
Fora Financial: Best for high loan amounts with lenient requirements
If you are looking for a bad credit business loan with lenient requirements for credit and time in business, look into Fora Financial. Fora Financial's small business loan only requires a minimum credit score of 500 and six months in business to apply. You can get loans of up to $500,000 and have no restrictions on the use of the business term loan. You also have the option to get merchant cash advances of up to $500,000. However, terms only go up to 15 months, and funding isn't as fast as it could be with a different lender.
Minimum credit score: 500
Time in business: Six months
Revenue requirements: $12,000 monthly gross sales
Credibly: Best for fast approvals and funding
For speedy approvals and funding, Credibly's working capital loan can be approved and funded in as little as one business day. Minimum requirements include a credit score of 500 and six months in business. You can take out as much as $400,000 for a flexible range of business uses. Credibly also offers SBA 7(a) loans, business lines of credit, equipment financing, merchant cash advances, long-term business loans and invoice factoring. On the downside, terms only go up to 18 months, there is a 2.5% origination fee, and you need $15,000 in monthly bank deposits to qualify.
Minimum credit score: 500
Time in business: Six months
Revenue requirements: $15,000 in monthly bank deposits
OnDeck: Best for loyalty benefits
If you are looking for a lender that rewards you for your loyalty, OnDeck has benefits that can waive your interest and lower or waive the origination fee for your next OnDeck business term loan. OnDeck may even reward your prepayment with an interest waiver. With OnDeck, you can take out up to $250,000 for terms of up to 24 months. Depending on your location, you might be able to receive same-day funding on loans of up to $100,000 if you complete the checkout process by 10:30 a.m. Eastern time. OnDeck also offers business lines of credit of up to $100,000 for 12-month terms. The main drawbacks include state and industry restrictions, a one-year time-in-business requirement and a starting interest rate of 35%.
Minimum credit score: 600
Time in business: One year
Revenue requirements: $100,000 annual gross revenue
Restrictions: Does not lend to businesses in Nevada, North Dakota and South Dakota. Does not serve the following industries:
- Adult entertainment/materials
- Drug dispensaries
- Firearms vendors
- Government, nonprofit, public administration and civic organizations
- Money services business (MSB)
- Rooming and boarding houses
BlueVine: Best for low interest rate business financing
For a low interest rate business financing option, BlueVine has business lines of credit with interest rates starting at 4.8%, funding for up to $250,000 and no opening or maintenance fees. Approvals can be as fast as five minutes, but a 600 minimum credit score is required, as well as a minimum of six months in business with $10,000 in monthly revenue. BlueVine also offers invoice factoring for up to $5,000,000 with only a 530 minimum credit score and a three-month time-in-business requirement. Only corporations and LLCs can qualify for BlueVine products, and business lines of credit are not available in Nevada, North Dakota, South Dakota and Vermont.
Minimum credit score: 600 for line of credit, 530 for invoice factoring
Time in business: Six months for line of credit, three months for invoice factoring
Revenue requirements: $10,000 in monthly revenue
Restrictions: Not available in Nevada, North Dakota, South Dakota and Vermont
Fundbox: Best for no application, origination or prepayment fees
For business financing with no fees, Fundbox offers business term loans of up to $150,000 with no application, origination or prepayment fees. Fundbox requires a 600 minimum credit score, six months in business and $100,000 in annual revenue. Fundbox also offers business lines of credit of up to $150,000 with repayment periods of 12 or 24 weeks. The business term loan is under a beta phase, so it may not be available to all applicants. Additionally, terms are very short, which can make repayment a challenge. And you'll need to shop elsewhere if you need more than $150,000 in funding.
Minimum credit score: 600
Time in business: Six months
Revenue requirements: $100,000 annual revenue
How to get a business loan with bad credit
Having bad credit can make it harder to qualify for a small business loan, or it can limit the loan options available. However, your credit score is only one factor that lenders consider when reviewing small business loan applications. Here are ways you can improve your chances of approval:
- Shop around: Shopping for alternatives instead of settling on the first available option may help you land a better loan for your business. Shop different lenders to make sure you can meet your business funding needs.
- Build a strong business plan: A strong business plan can make up for bad credit by telling a lender how the loan will be used, how the loan will be paid off and how your business will succeed.
- Provide a down payment: When using a business loan for a purchase, providing a down payment can help increase the chance of approval. A down payment can help give lenders a sense of security or peace of mind.
- Offer collateral: In a similar vein to a cash down payment, offering collateral can help give lenders a sense of security. Secured loans, which have collateral, tend to have better rates and less-strict borrower requirements.
- Sign a personal guarantee: A personal guarantee makes the business owners personally responsible for the company's debt in the case of default. Lenders may require a personal guarantee.
- Build business credit: A business credit score measures your company's financial stability. A good business credit score can help your company qualify for business financing options like term loans.
- Consider a smaller loan amount: A smaller loan amount makes repayment less risky and can make lenders more confident in your ability to repay the loan.
- Get a cosigner: A cosigner, like a business partner, can add an extra layer of security for lenders. If you are unable to meet your debt obligations, the responsibility will fall on your cosigner.
- Prepare your application: Having the needed documents, such as your business bank statements, business loan agreement and business tax return, can help expedite the lender's decision.
Boost your creditworthiness
Lenders look at your credit score and history to get a sense of how much of a risk you are. Simple steps you can take to show lenders you’re reliable include:
- Pay down existing credit lines to reduce how much of your credit limit you’re using
- Resolve any erroneous negative marks in your credit history
- Make sure you pay your bills before they become 30 days late
- Apply for new credit only when it’s necessary
- Keep your bank accounts in good standing (lenders may ask for bank statements)
Documents needed to apply for bad credit business loans
Once you are ready to apply for business funding, you should make sure that you have all the necessary documents ready to go. Here are a few documents that you should have on hand:
- Signed business loan agreement
- Business mortgage statement if you own; business lease agreement if you rent
- Unexpired government-issued picture ID for each owner
- Bank statements from business banking account
- Business tax return
Types of bad credit business loans
Besides term loans and business lines of credit, there are alternative funding options that can meet your immediate financing needs:
- Invoice financing or factoring: Invoice financing and factoring involve lenders paying you based on your invoices ahead of time. This is a good option if you have reliable customers who pay on time, but the fees tend to be higher.
- Merchant cash advances: In a merchant cash advance, lenders give you an advance and you repay it via your daily or weekly credit card sales. Like invoice factoring, you get the benefit of upfront cash, but your payments to the lender can vary widely based on your daily or weekly receipts.
- Equipment loans: Lenders provide equipment financing to businesses that need to buy gear or vehicles. While good for funding the purchase of new equipment, you’ll likely need to offer up your equipment or other assets as collateral to get the money.
- Payment processors: PayPal, Square and similar payment processors offer business financing. You get the advantage of working with a company you already know, but in some cases, repayment occurs daily or weekly. You'll typically need to be a customer with the lender before you’re approved.
- Business credit cards: Like a line of credit, business credit cards offer amounts that you only repay when you use the money. The interest rates may be lower than what you’d get from some online lenders. Many cards offer rewards, but if you use up your credit limit, you can further damage your credit score.
- Grants: Unlike loans and other financing options, small business grants are "free money" that you are not obligated to repay.
- Creative funding options: Crowdfunding platforms like GoFundMe, Indiegogo and Kickstarter can provide a creative way to raise funds for your business without the strict requirements of traditional and online lenders. However, you may have a difficult time standing out among the many other businesses campaigning for funds.
Startup business loans with bad credit
Most lenders on our list require at least six months in business to qualify for a business term loan or business line of credit. For newer startups, alternatives like invoice factoring may be a better option. For instance, BlueVine only requires three months in business for its invoice factoring offering. Other options include personal loans, business credit cards and crowdfunding platforms.
FAQs about bad credit business loans
Can I get a business loan with a 500 credit score?
Yes, lenders like Fora Financial and Credibly offer business loans with a 500 credit score minimum requirement.
Are there government small business loans for bad credit?
Yes. Microlenders like Accion Opportunity provide U.S. Small Business Administration (SBA) loans with low credit score requirements.
What is the easiest business loan to get?
It depends. The easiest business loan will depend on how well you can align with the application requirements.
Can I get a business loan with no revenue?
Most likely no. Most lenders have a minimum revenue requirement. However, you may consider alternatives to business loans, like crowdfunding, to access funds for your business.