Loans > Business Loans for Bad Credit Scores

Business Loans for Bad Credit Scores

There’s no need for a sky-high credit rating if you want to fund your business. Great business loans for bad credit scores are aplenty and you can get your hands on them in a matter of days.

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Reviewed by
Updated November 06, 2020

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When the economy takes a dive, businesses take a dive with it. That’s why many companies, especially small family enterprises, take out business loans to stay afloat.

If your business needs extra funding, this is a great time as any to solve that issue with a loan. Interest rates are at an all-time low and some government programs even provide free money for small businesses – although these programs are inefficient and often riddled with scams.

But what happens if you couldn’t get that free federal money, and your bank doesn’t like your credit score? Is that the end? Of course not!

We’re way past the point where we need to rely on banks and the government for funding. Numerous online lenders provide cheap loans quicker than big banks – and more importantly, these alternative lenders do not require high credit scores.

As long as you’re in the 530+ area, you’ll find plenty of offers. In some instances, these lenders don’t even look at credit scores – your business’ performance and cash flow are all that matters. 

So, if you have bad credit and need a loan, you just need to find the right one. This is why we’ve made a list of the best online lenders for companies with low credit scores.

Ready? Let’s see what the top of the online lending industry has on the menu today.

Top Business Loans for Bad Credit

Our pick of the best business loans for low credit:

  1. Kabbage
    Best Overall
  2. Funding Circle
    Best for Long Repayment Terms
  3. BlueVine
    Best for Quick Funding
  4. Fundbox
    Best for Low Requirements
  5. OnDeck
    Big Loans with Low Requirements

Best Business Loans for Bad Credit

LenderEstimated APRLoan Term RangeLoan Amount RangeMinimum Annual RevenueMinimum Credit Score
1. Kabbage1.5% - 10% monthly fee instead of an APR6 - 18 months$500 - $250,000$50,000No minimum requirement
2. Funding CircleStarting at 4.99%6 - 60 months$25,000 - $250,000No minimum revenue620
3. BlueVine15% - 78%6 - 12 months$5,000 - $250,000$120,000530
4. Fundbox10% - 79%12 - 24 weeks$1,000 - $100,000$50,000550
5. OnDeck11.89% - 51% 3 - 36 months$5,000 - $500,000$100,000600

1. Kabbage – Best Overall

Kabbage Logo

Pros

  • No credit score requirement
  • Near-instant approval for loans under $150,000
  • No APR
  • Loans start at a mere $500

Cons

  • Pricing doesn’t incentivize stretched-out payment
  • At least 1 year of business is required to get approved
  • The longest repayment term is 18 months
Visit Kabbage on Kabbage’s website

If you need quick funding and your low credit has got you in a pickle, you will probably love Kabbage. As one of the biggest online lending platforms, Kabbage has given out more than $6.5 billion in loans ranging from as little as $500 to $250,000.

Even if you have a very low FICO, you still might find a good loan here. This is because Kabbage won’t measure your creditworthiness solely on your credit score. Rather, the company will look at your business’ performance – you will get the money if your company has good cash flow and performance.

Your business must have annual revenue of at least $50,000 and there is no collateral, but you have to guarantee the debt personally. There is no origination fee, which makes these loans more accessible and the payment terms can be anywhere between 6 and 18 months.

There’s no APR for Kabbage’s loans – instead, you need to pay a fee that equals 1.5% – 10% of the amount you owe every month you’re still in debt. This means you pay your principal every month plus the aforementioned fee. This means that the quicker you pay off the debt, the less you have to pay.

If you meet the requirements and your desired loan is under $150,000, it will likely get approved in minutes. However,  debt requests larger than $150,000 are vetted manually and usually take up to one week to go through.  


2. Funding Circle – Best for Long Repayment Terms

Funding Circle Logo Banner

Pros

  • No minimum revenue requirement
  • Longest loan term is 5 years
  • Low interest rates for clients who qualify

Cons

  • Relatively high minimum loan
  • 620 FICO requirement
  • Loan disbursement can take as much as 10 days

Visit Funding Circle on Funding Circle’s website

Some businesses need big loans and big loans often require long payment terms. Funding Circle provides just that – business loans here range from $25,000 to a whopping $500,000 and the repayment terms can be as long as 5 years.

The requirements here are a bit stricter, though – you need a 620+ credit score and at least 2 years in business to get a loan from Funding Circle. Also, all owners need to sign a lien on company assets and give a personal guarantee that their company will respect the terms of the loan.

There is no minimum company revenue requirement and the lowest APR is very competitive at 4.99%. You will need a higher FICO than 620 to get the lowest APR but whatever loan you get, you will need to wait up to 10 days until your application is approved and the money transferred to your bank account. 

This waiting time is slightly longer than average but it is not the only drawback – clients need to pay a 3.49% – 6.99% origination fee which you can avoid completely with some other lenders. This means you need to pay a percentage of your loan upfront just to get your funds.

All in all, Funding Circle can get you where you need to be if you’re looking for a bit more substantial business loan. The 620 FICO requirement isn’t the lowest but you can have as much as 5 years to pay your loan off and the interest rates at Funding Circle are among the lowest you’ll come across today.


3. BlueVine – Best for Quick Funding

BlueVine Logo

Pros

  • Funding in less than 24 hours
  • Credit requirement is only 530
  • Business only needs to be 3 months old

Cons

  • APRs are not the lowest
  • Inflexible payment terms (6 – 12 months)
Visit BlueVine on BlueVine’s website

Those in need of quick funding need a quick lender – and therein lies BlueVine’s bread and butter. The approvals here usually take up to five minutes, and if everything checks out, you will get money for your company in 24 hours or less. 

BlueVine won’t test your patience and getting approved is pretty easy to boot. The minimum required credit score is 530, but your business needs to be at least 3 months old and have $120,000 or more in annual revenue to qualify. This makes BlueVine better suited for companies that have an established revenue stream rather than brand-new enterprises.

Loans at BlueVine range from $5,000 to $250,000 and APRs can be anywhere between 15% and 78%. Since payment terms are always between 6 and 12 months, paying off BlueVine’s loans is a bit more difficult compared to other loans on this list.

However, the expenses are clean – there are no origination and prepayment fees, so you can get rid of your debt earlier with zero penalties. BlueVine also offers invoice factoring ranging from $5 thousand to $5 million with 1 to 12-week payment terms. 

In summary, BlueVine is super-quick and doesn’t require that much in terms of credit, company age, and revenue – but has an APR that’s a bit higher than other low-credit loans. This is why BlueVine is great for businesses with a healthy cash flow that need funding ASAP.


4. Fundbox – Best for Low Requirements

Fundbox logo Banner

Pros

  • Low minimum credit score of 550
  • Very low requirements all-around
  • Minimum loan is only $1,000
  • Funding as soon as the next business day
  • No Application Fees, No Origination Fees, No Prepayment Penalties

Cons

  • Repayment terms up to 24 weeks
  • Maximum loan is only $100,000
Visit Fundbox on Fundbox’s website

You don’t need a huge credit score and company revenue to get a business loan, especially when it comes to Fundbox. Your business must be at least 6 months old and have $50,000 or more in annual revenue – very accessible compared to the majority of other business loans.

Moreover, Fundbox doesn’t require much in terms of patience. Applications get approved in minutes, and you can usually expect funding within the next couple of days.

The loans at Fundbox range from $1,000 to $100,000, which is limited but great for borrowers who don’t need a huge money injection for their business. The repayment terms are only 12 to 24 weeks but since the maximum loan isn’t huge, making the payments on time is doable.

The APRs for term loans can be between 10% and 78%, based on how healthy your company’s financials look to Fundbox. While 10% might seem high at first glance, Fundbox’s low requirements, speedy funding, flexibility, and lack of fees make even 10% APR a great offer.

If you need speed, competitive interest rates, and easy access then Fundbox might be a perfect catch. On the other hand, you might want to look elsewhere if you want a business loan with long, stretched-out payments.


5. OnDeck – Big Loans with Low Requirements

OnDeck Logo Banner

Pros

  • Low credit score requirement
  • Quick lending
  • Highest loan is $500,000

Cons

  • Origination fee
  • Average interest rates
Visit OnDeck on OnDeck’s website

Your business doesn’t need a huge credit score to get a sizable loan. OnDeck only requires a 600 FICO so you can approach them for a loan as long as your business has been in operation for at least a year and has annual revenue of $100,000 or more.

OnDeck’s term loans range from $5,000 to $500,000 so you’re covered regardless of whether you need a little or a lot. Repayment terms can be anywhere from 3 months to 3 years – which is very handy if you intend to get rid of your debt quickly.

There is no prepayment fee for term loans but you need to start your relationship with OnDeck with a 2.5% to 4% origination fee. On the other hand, opening a line of credit doesn’t incur fees and you can borrow up to $100,000 from your account.

OnDeck approves loan requests within 24 hours and disburses funds in as little as 2 working days. This makes OnDeck very quick, but not quite as cheap as other similar lenders. The APRs range from 11.89% to 51%, which would be fantastic if the competition wasn’t even cheaper.

All in all, OnDeck doesn’t particularly stand out in any specific field but has a strong all-around offer and low credit score requirements. OnDeck has had a solid run as an online small business lender, as it has already satisfied over 100,000 clients with more than $10 billion given out in loans.


What Bad Credit Means

Bad credit means a low credit score. When it comes to business loans, anything in the low 600s and below is considered lower than average, e.g. “bad”. Companies with bad credit will have a harder time getting good, low-interest loans, and sometimes, getting a loan at all.

Bad Credit Score

Having bad credit is especially problematic if you want to borrow from a bank. Traditional banks heavily favor high credit scores and will not consider a low-credit company worthy of loans even if the company’s business performance is excellent. That is why companies and individuals with low credit scores are better off looking for alternative sources of funding.

💻 Want to raise your credit score? You can do so automatically. The top credit repair software can increase your credit with just a few clicks.

How Alternative Lending Works

Banks usually won’t even look at your business if your credit isn’t as high as they think it should be – but there are other lending options and they often come with benefits. The lenders we will mention here are all available online, so you don’t have to go anywhere or wait in a line to speak to a counselor.

Online lenders like the ones in the list above have certain advantages over traditional banks. For one, they are 100% accessible online and can review your loan applications in a matter of days, and sometimes, in a matter of minutes.

Also, due to their fully-digital approach, online lenders can process your information quickly and transfer your funds just a few days after your loan has been approved.

Online lenders are quicker than banks but that’s not their biggest advantage. Some modern lenders don’t rely on credit scores to determine who gets a loan.

Rather, they will inspect your company’s performance and financial history. This means that you can get a good loan as long as your business is in good health – which is how things ought to be.

If you don’t know where to find these online lenders and which one will get you the best deal, you can try a loan aggregator. A loan aggregator is an online marketplace where you can see all loan offers available to you and pick your favorite one. 

These platforms are handy as they will shorten and narrow-down your search for loans dramatically. If you’re looking for a small business loan and have a FICO of 550 or higher, you can take a look at the pros and cons of Fundera – a lending platform that specializes in providing great business loans.

How to Get a Business Loan With Bad Credit

Sure enough, getting a loan is a lot easier with a perfect FICO – but what should you do if your credit is on the low side? Actually, there are quite a few options to choose from if you have got bad credit. Here are a few things you know when looking for loans with low requirements.

1. Check Your Credit Profile

First of all, you need to know what you’re dealing with. You should take a look at your business’ credit report as well as your own. Knowing how to interpret your credit report is something you’ll need to get started.

This will tell you your credit score as well as what you can do to improve it. The 3 big credit bureaus Experian, TransUnion, and Equifax offer free annual credit reports on their websites and checking them out shouldn’t take much time.

2. Limit Your Search

To save yourself a lot of time, it’s good to only look at lenders that are likely to give you a loan. Banks usually don’t look at clients with credit scores below 680 when it comes to business loans, so it’s better to check out online lenders if you’re in the 530 – 680 area.

You can find merchant cash advances for scores above 500 online, but business loans and lines of credit have stricter requirements.

3. Microlenders Deserve Attention Too

Some non-profit lenders only deal in small loans. These loans have very low interest rates if any at all so they are an excellent choice if your business can make use of a small, cheap loan.

4. Cash Flow is the Priority

If you don’t pay your credit bills on time, the missed payments get recorded in your credit report and drive down your score for the years to come. So, before accepting a loan, see if your cash flow is solid enough to make good on your debt every month.

5. Improve Your Credit

If you just can’t find the perfect loan, improving your credit might be the only way forward. To do this you can pay off your debt very responsibly and on time, improving your score over time. But before you take on that long journey, you should remove negative items from your credit report – under the right circumstances, this can improve your credit more than any single action.

6. Check Out Government Loans

The COVID-19 crisis has been bad for our health, but also the wellbeing of our economy. That’s why Uncle Sam has stepped in to help businesses stay with their heads above the water in this unwelcoming environment. The government is offering free small business loans, like PPPs and other types of loans.

How to Get a Business Loan During COVID-19

The government has set up a huge pot of money that it is using to help small businesses and their employees get through these unstable times. PPP loans and EIDL loans have been very popular among business owners lately because they are either cheap or completely free.

That’s right, PPPs are completely free money – as long as you don’t cut your employee count and avoid lowering paychecks by more than 25%. 

Although PPPs are meant for small businesses, big companies were the first in line for the free federal money. Moreover, the big banks and the government haven’t done a perfect job giving out these loans – thousands of companies haven’t gotten PPPs they got approved for. 

This is mostly because traditional banks simply cannot process and approve so many loan requests. If you want to get your hands on a PPP loan quickly, your best bet is to work with a top online loan aggregator. Banks have already done damage to small businesses by delaying loan payments, so an online lending platform is a better choice.

Are PPP Loans Still Available? 

No. PPPs were terminated on August 8th and there have not been any efforts to revive the program yet.

However, there are a few alternative programs small businesses can turn to. These include Federal Disaster Loans, 7(a) SBA Loans, Main Street Lending Program, and Employee Retention Tax Credit.

Types of Small Business Loans for Bad Credit

Banks can be very strict when it comes to giving out business loans. Fortunately, there are many loan types you can get through alternate lenders, even if your FICO isn’t very high. Here are some of them:

  • Term Loans. This is your usual loan – you borrow X amount of money and pay it back with interest over time. These loans can be used to fund your company or eliminate its debt through the process of debt consolidation.
  • Business Credit Cards. A credit card like this is good for two reasons – you can borrow money whenever you need to, and paying your bills on time is great for building your credit score quickly. Business credit cards work the same way as regular credit cards but usually have higher interest rates. That’s why you should only use them for borrowing small amounts you can pay off quickly.
  • Short-Term Loans. These are similar to regular term loans, but they have to be paid back in full in 3 to 24 months. Instead of making monthly payments yourself, your bank will automatically withdraw a fixed amount from your balance every week or month.
  • Short-Term Lines of Credit. You can think of a short-term line of credit as a credit card you intend to use for buying inventory and paying your workers. 
  • Invoice Factoring. You can have a bank (or some other lender) pay your employees’ paychecks so that you can pay back the bank at a later date. Your lender will then take a percentage of your company’s income every month to settle the debt.
  • Equipment Financing Loans. You can take out a loan to buy equipment for your business and use this equipment as collateral for the loan – this collateral keeps the interest relatively low. Equipment dealers offer equipment financing loans but you can also try other online lending platforms.
  • Merchant Cash Advances. You can take out a short-term loan that you will repay by giving your lenders a percentage of your future sales until the debt has been paid in full. Bad credit isn’t a big deal with this type of loan – as long as your company’s performance is good, lenders will see this as a good opportunity and will likely give you a merchant cash advance.

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Small Business Loan Fees and Expenses

Repaying a business loan isn’t as simple as making monthly payments on your principal and interest. There are many other expenses that can unexpectedly creep up on you if you didn’t read the fine print in the contract you signed.

Here are all the terms you need to know to make sense of the pricing of business loans.

  • APR – The annual percentage rate is the interest rate plus all other expenses associated with it. Usually, having great credit means you will get loans with lower APRs.
  • Down payment – Some lenders may require you to deposit up to 25% of the loan amount as a down payment. The better your credit score, the less you’ll need to pay upfront since lenders use credit ratings to determine if you’re a risky client. The downpayment can also be in equity – e.g. your business’ property.
  • Factor rates – Merchant cash advances use factor rates, and not interest rates, to determine how much the borrower needs to pay the lender. For example, if a company takes out a merchant cash advance for $1,000 with a factor rate of 1.3, it will need to pay back its lender $1,300.
  • Origination fee – Some loans incur a processing fee you need to pay upfront – this is called the origination fee. The fee counts towards paying off your total debt, but you need to pay it before you even get funds from your loan.
  • Underwriting fee – Before a lender gives out a loan, they have to pay the underwriters to assess the risk of doing so. Underwriting fees cover this expense.
  • Closing fees – Closing a loan isn’t very straightforward from the bureaucratic perspective. Cutting the red tape will only incur a small fee but it’s worth mentioning either way.
  • Late payment/prepayment fees – Logically enough, if you are late with a payment, that will incur a late payment fee. However, paying before the due date can incur a fee too. These are not the very common, but beware of prepayment fees when you take out a loan.

Bad Credit Business Loan FAQs

What Credit Score Do You Need for a Business Loan?

Most banks and alternative lenders require a credit score of 600 for small business loans. However, there are many online lenders and loan aggregators that only require 550 or even less. In some cases, an online lender might not require a credit score at all – they just look at your company’s performance and give you the loan if your business has good, stable cash flow. 

Can I Get a Loan With a Credit Score of 500?

Banks don’t usually give out business loans to borrowers with credit around 500. Some online lenders offer loans for credit around 500 but the interest rates are always high in that credit score range.

Do Banks Give Loans to Startups?

Yes, but only if the startups can repay them. Banks don’t like risks, so they will ask for collateral of the same value as the loan. The collateral is usually the property of the startup or a personal guarantee from its owners.

What is a 504 Loan Program?

A, SBA 504 loan is a lending program that involves 3 parties – the borrower, who puts in 10% of the loan, as well as a bank and a CDC (Certified Development Company) that finance the remaining 90%. This loan can only be used for buying fixed assets like real estate and the maximum loan amount is $5 million.

What Do Banks Look for When Giving Business Loans?

They look for the 5 “Cs” of credit – character, collateral, capacity, conditions, and character. These will determine if you will get a good deal and if you will get a loan at all.

What Are the Five “Cs” of Credit?

  • Character – First, the bank will look at your credit score and credit history. The higher your score and the longer your history, the better.
  • Capacity – The banks compare your income to your existing debt. They will look at your info to see if you are able to take on a new loan.
  • Collateral – If you have assets that the bank can seize if you default on your loan, it will result in better loan terms.
  • Capital – Same thing – if you have enough cash saved up, the bank will give you a better deal.
  • Conditions – Finally, the bank will ask you what you intend to use the funds for, and your answer will sway their decision. If you want to use the funds for something that will likely be profitable, the bank will like it more.

How Can I Secure a Business Loan Without Collateral?

Most business loans don’t require collateral – just the borrower’s personal guarantee that the debt will be paid off in time. However, putting the company’s assets and cash up as collateral will likely result in better loan terms.

All reviews, research, news and assessments of any kind on The Tokenist are compiled using a strict editorial review process by our editorial team. Neither our writers nor our editors receive direct compensation of any kind to publish information on tokenist.com. Our company, Tokenist Media LLC, is community supported and may receive a small commission when you purchase products or services through links on our website. Click here for a full list of our partners and an in-depth explanation on how we get paid.

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