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Kiah Treece is a small business owner and personal finance expert with experience in loans, business and personal finance, insurance and real estate. Her focus is on demystifying debt to help individuals and business owners take control of their finances. She has also been featured by Investopedia, Los Angeles Times, Money.com and other financial publications.
Kiah Treece is a small business owner and personal finance expert with experience in loans, business and personal finance, insurance and real estate. Her focus is on demystifying debt to help individuals and business owners take control of their finances. She has also been featured by Investopedia, Los Angeles Times, Money.com and other financial publications.
Jordan Tarver has spent seven years covering mortgage, personal loan and business loan content for leading financial publications such as Forbes Advisor. He blends knowledge from his bachelor's degree in business finance, his experience as a top performer in the mortgage industry and his entrepreneurial success to simplify complex financial topics. Jordan aims to make mortgages and loans understandable.
Jordan Tarver has spent seven years covering mortgage, personal loan and business loan content for leading financial publications such as Forbes Advisor. He blends knowledge from his bachelor's degree in business finance, his experience as a top performer in the mortgage industry and his entrepreneurial success to simplify complex financial topics. Jordan aims to make mortgages and loans understandable.
Lead Editor, Mortgages & Loans
Reviewed
Updated: Apr 2, 2024, 1:53pm
Editorial Note: We earn a commission from partner links on Forbes Advisor. Commissions do not affect our editors' opinions or evaluations.
Prospective borrowers will typically need a minimum personal credit score of 500 to qualify for bad credit business loans. If you have bad credit, your goal should be to find a lender that offers a loan your score qualifies for, not a lender with the lowest rate or most favorable terms. Here are seven lenders that can help you achieve that goal.
Why you can trust Forbes Advisor: Our editors are committed to bringing you unbiased ratings and information. Our editorial content is not influenced by advertisers. We use data-driven methodologies to evaluate financial products and companies, so all are measured equally. You can read more about our editorial guidelines and the loans methodology for the ratings below.
16 lenders researched
16 data points evaluated
Best Business Loans For Bad Credit5 cateogires scored
FEATURED PARTNER OFFER
OnDeck
4.8
Our ratings take into account loan cost, loan details, eligibility and accessibility, customer experience and application process. All ratings are determined solely by our editorial team.
We picked OnDeck for its variety of business lending products and same-day funding. OnDeck offers a term loan from $5,000 to $250,000 with repayments terms of up to 24 months. You can also access a credit limit of $6,000 to $100,000 through its line of credit with a 12-month repayment term that resets after each withdrawal.
Pros & Cons
Term loans from $5,000 to $250,000
Lines of credit from $6,000 to $100,000
Same-day funding
Low minimum credit score requirement
$100,000 minimum annual revenue requirement
Must have been operating for at least one year
Does not lend to businesses in North Dakota
Details
Eligibility
Minimum credit score: 625
Time in business: One year
Minimum revenue: $100,000 per year
Turnaround time
You can apply and receive a decision from OnDeck on the same day.
Best Business Loans for Bad Credit of April 2024
BEST FOR SHORT-TERM LOANS
OnDeck
4.0
Our ratings take into account loan cost, loan details, eligibility and accessibility, customer experience and application process. All ratings are determined solely by our editorial team.
OnDeck was founded in 2006 and has since been a leading provider in the business lending space, offering both term loans and lines of credit. Today, they have extended $14 billion in funding to small businesses.
We picked OnDeck for its variety of business lending products and same-day funding. OnDeck offers a term loan between $5,000 and $250,000 with repayments terms of up to 24 months. You can also access a credit limit of $6,000 to $100,000 through its line of credit with a 12-month repayment term that resets after each withdrawal.
Note: OnDeck does not lend to businesses in Nevada, North Dakota or South Dakota. What’s more, while it lends to over 700 industries, there are some industries it cannot serve.
Pros & Cons
Term loans from $5,000 to $250,000
Lines of credit from $6,000 to $100,000
Same-day funding
Low minimum credit score requirement
$100,000 minimum annual revenue requirement
Must have been operating for at least one year
Does not lend to businesses in North Dakota
Details
Eligibility
Minimum credit score: 625
Time in business: One year
Minimum revenue: $100,000 per year
Turnaround time
You can apply and receive a decision from OnDeck on the same day.
BEST FOR FLEXIBLE LINES OF CREDIT
Bluevine
4.0
Our ratings take into account loan cost, loan details, eligibility and accessibility, customer experience and application process. All ratings are determined solely by our editorial team.
BlueVine is a financial technology company that provides financing solutions to small businesses nationwide. It specifically specializes in business lines of credit and checking accounts. As of December 2021, BlueVine no longer offers invoice factoring.
Bad credit business owners looking to access a line of credit on an as-needed basis can receive funds between $6,000 and $250,000. Through BlueVine’s Flex 6 payment structure, borrowers make weekly payments over 26 weeks. What’s more, after 45 days of payment on Flex 6, you may be eligible for a credit line increase. BlueVine also offers its Flex 12 structure, but it requires a minimum credit score of 650, so it’s not suited for applicants with bad credit.
BlueVine also charges weekly or monthly fees for its line of credit. Standard pricing is 1.7% per week or 7% per month for line of credit draws.
Note: BlueVine’s line of credit is available in most U.S. states except North and South Dakota, Puerto Rico and U.S. territories.
Pros & Cons
Receive a decision within five minutes and instant funding with a Bluevine business checking account, or receive funds within 24 hours
Lines of credit up to $250,000
Low credit score requirement
No mobile app for its line of credit
Monthly revenue requirement
Not available to businesses in Nevada, North Dakota, South Dakota, Puerto Rico and other U.S. territories
Details
Eligibility
Eligibility varies on the specific program a business owner chooses.
Weekly plan
Minimum credit score: 625
Time in business: Two years
Minimum revenue: $40,000 monthly or $480,000 annually
Business type: Corporation or LLC
Bankruptcies: No past bankruptcies
Monthly plan
Minimum credit score: 650
Time in business: Three years
Minimum revenue: $80,000 per month or $960,000 annually
Business type: Corporation or LLC
Turnaround time
After you submit your application, you can receive a decision in as quickly as five minutes and instant funding with a Bluevine business checking account. Borrowers who don’t have a Bluevine business checking account can receive funds within 24 hours.
BEST FOR WORKING CAPITAL FINANCING
Biz2Credit
4.0
Our ratings take into account loan cost, loan details, eligibility and accessibility, customer experience and application process. All ratings are determined solely by our editorial team.
Loan amounts
Up to $1M+
Revenue-based financing. Varies depending on product and qualifications
Revenue-based financing. Varies depending on product and qualifications
Does not disclose
575 or 650*
*See website for details
Editor’s Take
Biz2Credit is a digital funding platform that provides three funding options—term, revenue-based financing and commercial real estate (CRE) loans—ranging from Up to $1M+. It only takes a few minutes to apply.
Biz2Credit can connect business owners with revenue-based financing Up to $2M+ and term loans Up to $1M+. Revenue-based financing payments are flexible based on business performance, with a right to reconcile against actual business receipts while term loans are repaid through weekly, bimonthly or monthly payments over the course of 12 to 36 months. Biz2Credit also offers interest-only CRE loans from Up to $2M+ with terms between 12 and 36 months; payments are due monthly.
In the event that Biz2Credit cannot provide a financial product, it may present third-party options to qualified prospective borrowers. However, Biz2Credit confirms that “in the vast majority of cases, [it] will make a financing decision without referral to any external party.”
Pros & Cons
Revenue-based financing has flexible qualification requirements
Can pre-qualify for submitting an application
Offers term loans with weekly or biweekly payments
Does not disclose financing costs
Does not disclose turnaround time
High annual revenue requirement
Details
Eligibility
Eligibility varies based on the financing option you choose.
Term loan
Minimum credit score: 650
Time in business: 18 months
Minimum revenue: $250,000 per year
Revenue-based financing
Minimum credit score: 575
Time in business: 6 months
Minimum revenue: $10,000 per year
Turnaround time
Biz2Credit does not disclose the turnaround time for its financing options.
BEST FOR QUICK APPROVALS
Fundbox
3.5
Our ratings take into account loan cost, loan details, eligibility and accessibility, customer experience and application process. All ratings are determined solely by our editorial team.
Fundbox is an AI-powered business lending platform that speeds up the application, decision-making and funding process. It offers decisions within three minutes and funds as soon as the next business day.
Prospective borrowers have two business financing options through Fundbox. Business owners can apply for revolving business lines of credit up to $150,000 with repayment terms of 12 or 24 weeks. Your available credit goes back up as you repay your line of credit.
Pros & Cons
No prepayment penalty
Low minimum annual revenue requirement
Next-business-day funding
Only short-term repayment terms are available
Does not disclose APRs
Details
Eligibility
Minimum credit score: 600
Time in business: Six months
Minimum revenue: $100,000 per year
Turnaround time
With a business line of credit from Fundbox, you can receive your funds as soon as the next business day.
BEST FOR PRODUCT AVAILABILITY
Rapid Finance
3.5
Our ratings take into account loan cost, loan details, eligibility and accessibility, customer experience and application process. All ratings are determined solely by our editorial team.
From participating partners via businessloans.com’s website.
$5,000 to $1 million
Not disclosed
550
Editor’s Take
Rapid Finance is an online lender that has funded over $2 billion in business financing across a variety of industries. Business owners looking for unsecured loans can access a wide variety of options, including term loans, lines of credit, merchant cash advances and invoice factoring.
Rapid Finance unsecured loans range from $5,000 to $1 million with terms from three to 60 months, depending on the specific type of loan. However, business owners with bad credit typically won’t receive the largest loan amounts. What’s more, borrowers are required to meet daily or weekly repayment schedules.
To apply, applicants will need a form of identification, business bank account number and routing information, and their last three months of business bank statements.
Pros & Cons
Loans up to $1 million
Less stringent minimum qualification requirements
Fast closing and funding
Doesn’t disclose APRs or monthly fees
Maximum terms of five years
Smallest loan amount is $5,000
Details
Eligibility
Minimum credit score: 550
Time in business: At least six months
Minimum monthly revenue: $5,000
Turnaround time
Rapid Financing says it funds 90% of its loans within 24 hours, but it can take up to two days in some cases.
BEST FOR LOAN OPTIONS
Credibly
3.0
Our ratings take into account loan cost, loan details, eligibility and accessibility, customer experience and application process. All ratings are determined solely by our editorial team.
Credibly offers a wide range of business loans for bad credit—working capital loans, business lines of credit and merchant cash advances, specifically. What’s more, new businesses may also find it easier to secure financing because Credibly only requires businesses to be in operation for at least six months.
Working capital loans of up to $600,000 are available with terms between 6 to 24 months; payments are due daily or weekly. If a business owner should choose a business line of credit, they can access credit lines up to $250,000. Lastly, Credibly offers merchant cash advances (MCAs) up to $600,000 with terms between 3 to 24 months.
Pros & Cons
Wide variety of loan products
Low credit score requirement
Fast funding times
Lowest loan amount is $5,000
Requires daily or weekly payments
Details
Eligibility
Minimum credit score: 500
Time in business: At least six months
Minimum revenue: At least $15,000 in average monthly bank deposits
Turnaround time
Credibly offers same-day approvals and same-day funding once approved.
BEST FOR CROWDFUNDING UP TO $15,000
Kiva
3.0
Our ratings take into account loan cost, loan details, eligibility and accessibility, customer experience and application process. All ratings are determined solely by our editorial team.
From participating partners via businessloans.com’s website.
Up to $15,000
0%
None
Editor’s Take
Kiva is a microlender that offers a unique crowdfunding platform for a wide variety of prospective borrowers. Compared to traditional financing, Kiva utilizes your personal network and its own network of 1.6 million investor lenders to crowdfund loans up to $15,000 with terms up to 36 months.
Business owners who apply directly through Kiva’s website may receive Business owners who apply directly through Kiva’s website may receive 0% interest. Kiva refers to these as Direct Loans, which are only available to businesses in the U.S. and social enterprises internationally. However, if a prospective borrower applies through a Kiva Field Partner—local organizations working in communities to vet borrowers, provide services and administer loans—they will likely pay interest to the partner in some form, which varies by partner. interest. Kiva refers to these as Direct Loans, which are only available to businesses in the U.S. and social enterprises internationally. However, if a prospective borrower applies through a Kiva Field Partner—local organizations working in communities to vet borrowers, provide services and administer loans—they will likely pay interest to the partner in some form, which varies by partner.
Loan funds are distributed and repaid through PayPal or Kiva’s Field Partners.
Pros & Cons
No minimum credit score requirement
Does not require cash flow documents
Requires no collateral
Maximum loan amounts of $15,000
All loans are crowdfunded
Long funding times
Lender Details
Eligibility
Because Kiva uses a crowdfunding method, it’s able to offer less stringent qualification requirements. Although Kiva loans don’t require a minimum credit score, cash flow documents or collateral, borrowers are vetted or endorsed by either a local Field Partner, Trustee or members of the community.
Turnaround time
After you submit your application, a Kiva representative will get back to you within 10 to 15 business days. Kiva suggests that “submitting a great photo and business story will help your application make it through the review process more quickly.”
Once you’re approved for fundraising, you have 15 days to raise funds from your own network, and then 30 days to publicly fundraise with Kiva’s network of lenders.
From participating partners via businessloans.com's website.
Tips for Comparing Business Loans for Bad Credit
Consider these tips when comparing business loans for bad credit:
Consider minimum credit score requirements. There is not a standard minimum credit score requirement for bad credit business loans. Some lenders may set a minimum requirement of 600 while others set a minimum of 500. When comparing lenders, be sure to find lenders that have a minimum credit score requirement that matches your unique creditworthiness.
Compare the top-end range of interest rates. Because interest rates largely depend on your qualifying credit score, you’re likely to land a rate at the top end of the range with bad credit. Although most lenders don’t disclose their rates upfront, be sure to prequalify, if possible, and/or confirm rate ranges with each lender you’re considering.
Determine how you want to receive your funds. It’s likely you’ll receive business financing through one of two ways: as a lump-sum payment or on an as-needed basis. If you want to receive your funds up front, choose a traditional term loan. However, if you want to use funds only as you need them, a business line of credit might be a better option.
Consider the repayment terms and flexibility. Each business financing lender has its own repayment structures. While some types of financing require monthly payments, others may require daily or weekly payments. Compare different lenders’ repayment terms when choosing your preferred lender and business loan.
Look out for additional fees. Some lenders charge no origination fees, late payment fees, prepayment penalties or other common loan costs. However, it might not always be the case. Be sure to confirm a lender’s fee structure when shopping for the best terms. Factor in additional fees into your decision-making process.
Evaluate the lender’s customer support options. If you’ve found a lender that’s prepared to offer the money you need at acceptable terms, consider the lender’s support options before signing the loan agreement. Customer support can make a huge difference down the line if you encounter issues with repayment. Research the lender’s customer service resources and read reviews to make sure it’s a good fit.
Lenders typically look at a business owner’s personal credit score and business score when evaluating a business loan application. However, for startups and other businesses without a credit history, the applicant’s personal score is even more important.
A business owner should have a personal FICO Score of at least 500 to qualify for a bad credit business loan. That said, even a FICO Score under 670 is considered fair or poor, and likely won’t qualify a business owner for the most competitive interest rates available.
What Is a Bad Credit Loan?
A bad credit loan isn’t an official designation, but it’s generally a loan made to someone with a bad credit score, or below 580. If you have bad credit, it’s tougher to get approved for a loan and you’ll likely receive offers with higher rates. It’s best to apply with lenders that cater to prospective borrowers with bad credit to improve your chances of qualifying. If you apply with top lenders like OnDeck or Bluevine, you’re more likely to be denied.
Can You Get a Business Loan With Bad Credit?
It’s possible to get a small business loan with bad credit, but applicants with low credit scores may have a harder time getting approved for traditional loans. What’s more, small business owners with bad credit—scores as low as 580—typically can only access high interest rates.
Business owners with low credit scores must also demonstrate strong, stable cash flow to qualify for a business loan, and lenders may require collateral. For these reasons, an alternative form of financing like a merchant cash advance may be a better option for business owners with bad credit.
Can You Get Startup Business Loans With Bad Credit?
Regardless of the business owner’s personal credit, businesses under a year old—and those with limited demonstrable revenue—may find it difficult to qualify for a business loan. As with small business loans for bad credit, there are some lenders that specialize in startups with bad credit. Still, these loans often come with high interest rates and other fees. If you have a startup with bad credit, consider a financing alternative like a business credit card or, where appropriate, a merchant cash advance or invoice factoring.
Requirements for a Business Loan With Bad Credit
Although business loans for bad credit have lower credit score requirements, most lenders have other qualifications for a loan that your business will need to meet. The other requirements your business will likely need to meet include:
Revenue. Many lenders require an annual revenue of $100,000 or more in order to qualify for a loan.
Time in business. Most lenders set a requirement for time in business in order to qualify for a loan. Many lenders require at least one year in business.
Industry. Lenders often limit the industries they can lend to, so be sure your business qualifies before applying.
Collateral. Depending on the type of loan and lender, your business may need to have sufficient collateral, or in some cases, you may need to sign a personal guarantee.
Outstanding debt. Lenders may use your debt-to-income ratio and debt-to-serve coverage ratio to determine whether or not your business can afford to take on new debt.
Types of Bad Credit Business Loans
Having bad credit shouldn’t stop you from starting a business, but it can make it more challenging. You might have a harder time getting approved for a business loan, and if you are approved, you may have to pay a higher cost than someone with good credit. You may also have to get creative with the types of bad credit business loans you apply for, which can include:
Term loans
Term loans are one of the most common forms of business financing; you get a lump sum of cash that you pay back monthly over a set period.
SBA loans
SBA loans offer businesses financing with various types of loans and loan purposes. Lenders consider a wide range of factors when evaluating applications, so businesses with bad credit may qualify.
Line of credit
This is a flexible source of funding that you can use as needed and also reuse as you pay down your balance. With a line of credit , you have access to a predetermined credit limit instead of a lump sum of cash, and you only owe interest on the amount you draw.
Secured loans and lines of credit
Some lenders offer secured loans or lines of credit, where you back the loan with collateral—typically a savings account or expensive equipment that you own that the lender can repossess if you don’t repay the loan.
Equipment financing
If your business needs financing to purchase equipment or other machinery, some lenders offer equipment financing to fund that purchase. These loans are secured and are backed by the equipment being purchased.
Merchant cash advance
This is a lump-sum loan that you repay with daily payments based on a percentage of your sales until the loan is repaid. A merchant cash advance offers you flexibility because your payments are scaled to your sales.
Invoice factoring
With invoice factoring , you submit your customers’ invoices to your lender, which then collects the payments from your customers. It’s typically best for companies that generate invoices to other businesses and are in need of quick funding with flexible qualification requirements.
Pros and Cons of Bad Credit Business Loans
It’s important to carefully consider any debt your business takes on, especially financial products for business owners with bad credit. Here are some key points to consider:
Pros
Funding can be as quick as 24 or 48 hours after approval
Can make your business goals possible
May help you build credit if your lender reports your payments to consumer credit bureaus
Cons
Typically come with high interest rates
Some lenders charge additional fees, such as an origination fee
You may only be eligible for lower loan amounts compared to borrowers with strong credit
Not all lenders report payments to consumer credit bureaus
How To Choose a Small Business Loan With Bad Credit
When you have bad credit, choosing a small business loan requires more than deciding how much to borrow and shopping for the most competitive rates. Consider these factors when choosing a bad credit small business loan:
Qualification requirements. Most small business loans are granted based on the applicant’s personal credit score. Check your personal credit score and then compare minimum credit score requirements at various lenders to see where you might qualify.
Loan offerings. Small business loan offerings vary by lender. Not only do lenders offer a range of loan amounts and repayment terms, but some also offer secured loans that are easier to qualify for than unsecured options.
Annual percentage rates. Business loan annual percentage rates—or APRs—vary by loan type and lender, and the lowest rates are only available to the most qualified borrowers. If you’re likely to qualify through multiple lenders, compare APRs to determine which option offers the most affordable rates.
Additional costs and fees. Many traditional and online lenders charge origination fees to offset the costs of processing applications and underwriting loans. However, lenders that specialize in borrowers with bad credit often charge more fees than other competitors.
Lender reputation. Having bad credit means you may not get to choose from your pick of top lenders. Read online reviews and check with other local business owners to see which lenders have the best reputation—and which to avoid.
Underwriting and funding speed. Many lenders that cater to borrowers with bad credit offer slower underwriting and funding speeds than competitors. However, it can still be helpful to compare lenders and determine which offers a faster turnaround time.
Where To Get a Business Loan With Bad Credit
Getting a bad credit business loan is more difficult than qualifying for a loan with a good credit score. For that reason, it may be necessary to look at several lenders—and types of lenders—to find one willing to extend funds to your business. These are some of the best places to get a bad credit business loan:
Traditional banks and credit unions
It’s typically more difficult to get approved for a small business loan through a traditional bank or credit union. However, if you have stable cash flow and are already working with a local bank or credit union, you may be able to qualify with a local lender that already has knowledge of your business and revenue.
Online lenders
Online lenders generally offer more flexible and less competitive borrower qualifications than larger, traditional institutions. Some online lenders even specialize in serving borrowers with bad credit.
CDFIs
A community development financial institution is a private financial institution with the primary mission of helping communities that traditionally lack access to banking and investing. These community-centered lenders offer certain business owners funds as a way to strengthen the local community and economy.
Invoice factoring companies
Invoice factoring is an alternative to traditional business loans that involves selling a business’s outstanding invoices to a third-party company for a cash payment. While the business only receives a portion of the invoice balance—usually between 80% and 90%—the strategy provides access to fast cash without having to qualify for a traditional loan.
Merchant service providers
Similar to invoice factoring companies, many merchant service providers offer financing in exchange for a portion of future credit card sales. If your business experiences a high volume of sales, merchant cash advances (MCAs) may be a good way to access cash quickly.
How to Get a Business Loan With Bad Credit
The process of applying for a business loan varies by financial institution, but most banks and online lenders impose similar requirements. That said, it’s more difficult to get a business loan with bad credit, so there are some additional steps to take before submitting a formal application. Follow these steps to get a business loan with bad credit:
Check your personal and business credit scores. Knowing your exact score and the content of your credit report can help you better understand how lenders will evaluate your loan application. If your business is established, also check its business credit score through Experian, Equifax or Dun & Bradstreet (D&B).
Improve your credit scores. If possible, take time to improve your credit score before applying for a loan for your business. Start by reviewing your credit reports and disputing inaccuracies that are negatively impacting your score. Then, pay down debts to reduce your credit utilization and continue making on-time payments.
Prepare your business for due diligence. Lenders conduct extensive due diligence before extending small business loans. This typically involves reviewing the applicant’s business plan, personal and business bank statements and other financial documents.
Identify possible co-signers. A co-signer is someone who agrees to repay a loan if the primary borrower defaults. Not all lenders accept co-signers, but finding a co-signer with a high credit score can improve your chances of approval or available loan terms.
Compare lenders to find the best deal. To reduce the risk posed by lending to less qualified borrowers, financial institutions impose higher interest rates than those available to more creditworthy applicants. While you may not qualify for the lowest rate, you may still save money by comparing loan amounts, repayment terms and rates offered by multiple lenders.
Submit an application. Loan application and underwriting processes vary, so contact your preferred lender before you apply. Once you’re ready, submit the necessary information online, over the phone or in person.
Alternatives to Bad Credit Business Loans
If your business doesn’t qualify for bad credit business loans or you want to consider alternatives, there are other financing options available.
Personal loans. You can take out a personal loan to help fund your business since personal loan funds can be used for most expenses. These loans can be easier to qualify for than most business loans, and there are bad credit personal loans available. Nonetheless, fees and interest can be costly and there are more limited loan amounts and terms available.
Business credit cards. If your business has ongoing or unpredictable expenses, business credit cards can be a good option to cover costs. Keep in mind, if you do accumulate debt on credit cards, have a plan to quickly repay it since they often come with high APRs.
Peer-to-peer lending. Peer-to-peer business loans fund businesses through individual investors. These lenders often impose less strict qualification requirements compared to traditional business lenders.
Business grants. If your business qualifies, business grants can be a great option to fund your venture since they don’t need to be repaid. Often, business grants have strict qualification requirements and competitive application processes.
We reviewed 16 popular lenders based on 14 data points in the categories of loan details, loan costs, eligibility and accessibility, customer experience and the application process. We chose the best lenders based on the weighting assigned to each category:
Loan cost: 25%
Loan details: 25%
Eligibility and accessibility: 20%
Customer experience: 20%
Application process: 10%
Within each major category, we also considered several characteristics, including available loan amounts, repayment terms and applicable fees. We also looked at minimum credit score and time in business requirements. Finally, we evaluated each provider’s customer support tools, borrower perks and features that simplify the borrowing process—like online applications, prequalification options and mobile apps.
Where appropriate, we awarded partial points depending on how well a lender met each criterion.
It’s typically easiest to get business loans from online lenders because they offer online pre-qualification to check rates without a hard credit pull, and qualifying criteria may be flexible. Online lenders may deposit funds into your bank account within a few business days of approval. In comparison, traditional banks may ask you to visit a bank or speak with a loan specialist to apply, and the entire application and funding process could take longer.
What credit score is needed for an SBA loan?
The U.S. Small Business Administration (SBA) doesn’t set specific minimum credit score requirements for SBA loans. However, individual SBA-approved lenders set their own requirements, which vary for each lender. We recommend a minimum credit score of 680 to qualify for an SBA loan.
How do you build business credit with a bad personal credit score?
Establishing your business credit profile is the same whether you have good or bad personal credit. You’ll need to register your business, get an employer identification number (EIN) and request a D-U-N-S number.
Once you’ve established your business credit profile, consider credit accounts designed for business owners with damaged credit, including business credit cards for bad credit. Managing a business credit card responsibly by paying your balance on time or early in full can help build your business credit.
What documents are needed to apply for a bad credit business loan?
Applying for a bad credit business loan typically involves providing business bank statements and personal and/or business tax returns. You’ll also need to provide copies of business licenses and permits, proof of business registration and your business’s Employer Identification Number (EIN) or Federal Tax Identification Number (TIN).
Before approving a loan application, most lenders also require a business plan and copies of financial statements—including a profit and loss statement, balance sheet and cash flow statement. This is especially important when applying for a bad credit business loan because it demonstrates the business owner’s ability to repay the loan in spite of their poor credit. Business owners with low credit scores may also be required to provide proof of collateral.
How do you get business loans for veterans with bad credit?
Veterans may be able to qualify for loan programs through the SBA. The SBA’s website has a Lender Match database where borrowers can look for lenders that offer financing options.
In addition, the Veterans Business Outreach Center (VBOC) Program is a special initiative that offers mentorship, business plan preparation and more for veterans interested in starting or growing a business. If you have questions about funding options and whether you qualify, contacting a local VBOC could be a good place to start.
What can you do if you’re denied a bad credit business loan?
Whether you’re denied a bad credit business loan entirely or aren’t approved for a large enough loan, there are a few things you can do to secure financing:
Take steps to reduce your operating expenses and apply for a lower loan amount.
Identify a business partner with good credit who can serve as a co-signer and improve your approval odds.
Opt for a nontraditional source of funding, such as private investors or a crowdfunding campaign.
What other types of business financing can you get with bad credit?
Qualifying for a traditional business loan can be difficult if you have bad credit. However, there are other types of business financing that are more accessible to less creditworthy applicants. These alternatives—including merchant cash advances and invoice factoring—may be better suited to business owners with bad credit because they are secured and repaid by the business’s outstanding invoices and future sales.
Likewise, equipment financing may be available to business owners who need to purchase machinery and other equipment for operations. Because this type of financing is secured by the underlying equipment, it poses less risk to lenders and may be more accessible to borrowers with bad credit.
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Kiah Treece is a small business owner and personal finance expert with experience in loans, business and personal finance, insurance and real estate. Her focus is on demystifying debt to help individuals and business owners take control of their finances. She has also been featured by Investopedia, Los Angeles Times, Money.com and other financial publications.
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