Best Bad Credit Business Loans for 2021
Best Bad Credit Business Loans for 2021
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Business funding with bad credit can seem impossible, but there are online lenders that provide bad credit business loans even if you’ve got near rock-bottom scores. FICO defines poor credit as a score between 300 and 579 — lenders on our list consider scores as low as 500. They may, however, charge a premium and, like most lenders, take a close look at your time in business, revenue and other criteria.
Best Business Loans for Bad Credit 2021
Best for | Rates | Maximum amounts | |
|---|---|---|---|
| Credibly | 500+ personal credit score | Factor rates start at 1.15 | $400,000 |
| Fora Financial | 500+ personal credit score | Factor rates start at 1.10 | $500,000 |
| Fundbox | 600+ personal credit score | Start at 4.66% for 12-month terms or 8.99% for 24-month terms | $150,000 |
| BlueVine | 600+ personal credit score | Start at 4.8% | $250,000 |
| OnDeck | 600+ personal credit score | Start at 11.89% | $500,000 |
| Upstart | 620+ personal credit score | 8.41%-35.99% | $50,000 |
| Funding Circle | 660+ personal credit score | 11.29%-30.12% | $500,000 |
We evaluated more than 50 lenders to come up with this list of business loans for bad and fair credit. Top lenders providing small business funding for bad credit have generous credit requirements, transparent rates and terms and are available to a wide variety of business owners.
Credibly
Credibly’s working capital loans offer up to $400,000 with repayment lengths of six to 18 months. To qualify for one of these loans, you’ll need:
- A credit score of 500 or better
- At least six months in business
- $15,000 in average monthly deposits
Credibly charges a factor rate starting at 1.15, which means you’ll pay at least a 15% premium in order to receive funding. To calculate how much that factor rate will cost you, multiply it by your total loan amount. Also, you’ll likely pay a 2.5% origination fee that Credibly takes from your loan balance before it sends you the money.
Credibly offers merchant cash advances, too. This form of funding gives you money upfront that you repay through your business’s daily or weekly sales.
Fora Financial
Fora Financial’s small business loan provides between $5,000 and $500,000 in short-term funding (4 to 15 months). Qualified applicants need:
- A credit score of at least 500
- At least six months in business
- $12,000 minimum in monthly sales
Like Credibly, Fora uses factor rates to calculate the cost of its business loan and merchant cash advance though its starting rate is a bit lower, 1.10 with a maximum rate of 1.35. You’ll also pay a 2.50% origination fee. While Credibly offers the possibility of funding the same day you’re approved, you’ll most likely need to wait at least three business days to receive funding from Fora.
Fundbox
Fundbox’s lines of credit can give you up to $150,000 in cash you can access whenever you’d like and pay interest only on what you withdraw. That's different from the lump-sum loans offered by other lenders on this list. To qualify for one of Funbox’s business lines of credit for bad credit, you'll need:
- A credit score of at least 600
- At least $100,000 in annual revenue or, in some cases, projected annual revenue
- Two to three months of transactions in your business bank account or supported accounting software
Rates start at 4.88% for 12-week repayment plans and 8.99% for 24-week repayments. If you make a late payment, Fundbox will add the missed payment to the final payment you make and include a fee that’s equal to the average fee you paid on all other payments.
BlueVine
BlueVine term loans offer rates as low as 4.80% for amounts up to $250,000. You’ll have either six or 12 months to repay the loans, and you’ll make weekly payments to do so. If you want to use BlueVine to get a business loan for poor credit, you’ll likely need to meet the following criteria:
- Minimum 600 credit score
- At least six months in business
- At least $10,000 in monthly revenue
BlueVine does not charge an origination fee, making it a low-cost option if you want to maximize your funding amount without losing a percentage of it to fees.
If you’d prefer to get a line of credit instead of a term loan, the minimum credit requirement is a little higher: 650 instead of 600.
OnDeck
Like several other lenders on this list, OnDeck’s term loans are pretty straightforward. You may be able to borrow $5,000 to $500,000 with an average term-loan APR of 49.06%. You’ll have between three and 36 months to repay the loan if you’re approved and your payments will either be daily or weekly.
OnDeck’s requirements favor established businesses over startups that have launched within a few months of asking for funding:
- Minimum credit score of 600
- At least one year in business
- At least $100,000 in annual revenue
OnDeck notes, however, that its average borrower has been in business for at least three years, has an annual revenue of at least $300,000 and a credit score of at least 650.
As for fees, OnDeck charges an origination fee of 0% to 5% depending on your business’s health and cash flow. The lender deducts the fee before it sends you the loan, which means you’ll receive less than what OnDeck initially approved.
If you prefer a line of credit, OnDeck offers them at amounts ranging from $6,000 to $100,000.
Upstart
Upstart is a personal loan lender that allows you to use your loan for business purposes. The loan amounts will be lower, but you won’t have to show a certain amount of time in business or give Upstart access to your business bank account or accounting software. Its loans range from $1,000 to $50,000, have APRs of 8.41% to 35.99% and repayment terms of three or five years.
You’ll have to meet Upstart’s minimum borrower requirements to be eligible for a loan:
- At least a 620 credit score
- No bankruptcies in your credit history
- No delinquent accounts
- Fewer than six credit inquiries in the past six months
- Live in any state but Iowa or West Virginia
Upstart will charge a late fee of 5% of the missed payment or $15, whichever is greater. The lender charges an origination fee of 0% to 8%, too, which makes it one of the more expensive options on this list if you have to pay the highest origination fee. However, you’ll pay your loan back on a monthly basis rather than daily or weekly one, which could make it easier to manage your loan payments.
Funding Circle
Funding Circle’s loan amounts range from $25,000 to $500,000, APRs are 11.29% to 30.12% and repayment terms are six months to five years. To get access to these loans, you’ll need to meet Funding Circles minimum requirements:
- 660 credit score
- Two years in business
- No bankruptcies in the past seven years
- Not located in Nevada
According to Funding Circle, its average borrower has $1.4 million in annual sales, 12 employees, good to excellent personal credit and 11 years in business.
Funding Circle charges origination fees of 3.49% to 6.99% and it may assess a late fee of up to 5% of your missed payment.
How to get a business loan with bad credit
Bad credit scores can make it harder to get a loan but it doesn’t make it impossible. However, if you have a hard time getting funding, there are several things you can do to improve your chances of getting future loans.
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)
Also, take time to craft a thorough business plan. Lenders want to see that you have a solid roadmap; it builds trust and presents your business as a sound borrower.
Consider alternatives
If your financing needs are immediate and you don’t have time to build your, lenders offer alternative funding options to help you meet your needs.
Invoice financing or factoring Invoice financing and factoring involve lenders paying you 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 advance In a merchant cash advance, lenders give you an advance and you repay it via your daily or weekly credit card sales. 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. These loans could be a good way to fund the purchase of new equipment, but 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 financing to its business customers. You get the advantage of working with a company you already know, but, in some cases, repayment occurs daily or weekly. If you’re not already a customer, you’ll need to sign up for an account with the lender before you’re approved.
Business credit cards Business credit cards work like a line of credit with amounts that are often higher than personal credit cards. 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.
FAQs about bad credit business loans
Can you get a business loan with bad credit?
Yes, you can get a business loan with poor credit, as many online lenders have flexible credit-score requirements.
Are there government small business loans for bad credit?
Yes. Microlenders like Accion provide U.S. Small Business Administration (SBA) loans with credit requirements starting as low as 525.
What is the easiest business loan to get?
The easiest business loans to get are those with the lowest credit score requirements and the shortest minimum time-in-business length.
Can you get a business loan with no revenue?
Most lenders will require you to have enough income to cover your business expenses and pay back your loan. However, a personal loan lender like Upstart could be an option since it uses your personal income (among other factors) instead of business income to determine if you’ll get a loan.
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