Best Business Loans for Bad Credit
According to the Federal Reserve, 76% of businesses with low credit scores applied for financing in 2024, and more than half were at least partially approved.
| Lender | Best for | Starting rate | Amount | Term | |
|---|---|---|---|---|---|
|
Financing regularly | 7.80% (interest rate) |
$1k – $250k |
Up to 12 months | |
|
Financing equipment | 4.99% (interest rate) |
$500 – $2M |
12 – 84 months | |
|
Startups | 4.66% | Up to $250k | 3 – 12 months | |
|
Fast funding | 11.00% |
$25k – $600k |
6 – 24 months | |
|
Financing invoices | 0.75% (factoring fee) |
$30k – $5M |
Not specified | |
|
Microloans | 8.00% (interest rate) | Up to $50k | Up to 84 months | |
|
Seasonal businesses | 13.00% |
$5k – $1.5M |
Up to 24 months |
Learn more about how we chose our picks.
Bad credit business loan lenders at a glance
Best for: Financing regularly – Bluevine
- Starting rate (interest rate)
- 7.80%
- No maintenance fees or prepayment penalties
- Only pay interest on withdrawn amounts
- Funds available in as little as 24 hours, or faster with a Bluevine checking account
- Requires weekly payments
- Same-day funding could require a fee
- Doesn’t lend to businesses in Nevada, North Dakota or South Dakota
If you’re looking for flexible funds you can borrow from as needed to cover business expenses, Bluevine’s line of credit could be a good choice, offering up to $250,000 with no monthly maintenance fees.
You’ll only pay interest on funds you actually withdraw, which you can receive instantly if you connect a Bluevine Checking account. Otherwise, you can pay $15 to transfer funds to an external bank account within just a few hours or you can wait one to three business days to receive your funds via ACH fee-free.
That said, Bluevine’s line of credit requires weekly payments over a relatively short term, so make sure you’re comfortable with the repayment schedule before you make a withdrawal.
Read our full Bluevine review.
In order to qualify, you’ll need to meet Bluevine’s criteria of:
- Minimum credit score: 625
- Minimum time in business: 12 months
- Minimum annual revenue: $120,000
Best for: Financing equipment – Taycor Financial
- Starting rate (interest rate)
- 4.99%
- No down payment required
- No minimum time in business or annual revenue requirements
- No prepayment penalties
- May require a personal guarantee
- Charges a documentation fee
- Offers equipment refinancing options, but eligibility criteria is more strict
If you need to purchase or upgrade essential equipment for your business, Taycor Financial is a great option, financing the full cost of equipment with no down payment required. With a low minimum credit score and no revenue or time in business requirements, Taycor Financial is a viable option for both new businesses and those with challenged credit.
Taycor Financial makes quick decisions on loan applications, so you could get a response in just a few hours, and many borrowers receive their funds within one business day. You have several options for your loan payments, including seasonal, semi-annual and quarterly payments. However, note that the equipment will act as collateral to secure the loan, and you may also need to sign a personal guarantee.
Read our full Taycor Financial review.
To qualify for equipment financing, you’ll need a minimum credit score of 550 or higher, but Taycor Financial sets no minimum time in business or annual revenue requirements
Best for: Startups – Fundbox
- Starting rate
- 4.66%
- Short time in business requirement
- Relatively fast funding
- No prepayment penalties
- Requires weekly payments over short repayment terms
- Charges late payment and non-sufficient fund fees
- May require a personal guarantee
If your business has only been operating for a short time, you may find it difficult to get approved for business financing — especially with a lower credit score. But Fundbox’s business line of credit is a great option for startup companies with less-than-perfect credit, allowing businesses to qualify after just three months in operation with credit scores as low as 600.
This revolving line of credit offers up to $250,000 to put toward startup costs like registering your business, paying utilities and hiring staff. Once approved, you can begin making withdrawals as needed, typically receiving your funds within two business days.
However, Fundbox requires weekly payments over relatively short repayment terms, so be sure you can keep up with the schedule before you sign a loan agreement. Otherwise, you’ll face multiple fees for any missed payments.
Read our full Fundbox review.
In order to qualify, you’ll need to meet Fundbox’s criteria of:
- Minimum credit score: 600
- Minimum time in business: 3 months
- Minimum annual revenue: $30,000
Best for: Fast funding – Credibly
- Starting rate
- 11.00%
- Lowest minimum credit score on this list
- Offers funding as quickly as same day
- Short time in business requirement
- Requires daily or weekly payments
- High annual revenue requirement
- Factor rate makes it challenging to compare with other loan offers
If you’re looking for a fast business loan to pay urgent bills or take advantage of a limited-time growth opportunity, Credibly offers working capital loans that can be funded as soon as the same day you apply, and borrowers with personal credit scores as low as 500 can qualify.
With loan amounts up to $600,000, Credibly’s loans can be used to cover a wide range of business expenses. However, you’ll need to generate quite a bit of revenue — $15,000 or more per month — to qualify. Also, Credibly uses a factor rate to represent the cost of borrowing, which can make it more difficult to compare costs against other loan offers.
Read our full Credibly review.
In order to qualify, you’ll need to meet Credibly’s criteria of:
- Minimum credit score: 500
- Minimum time in business: 6 months
- Minimum annual revenue: $180,000
Best for: Financing invoices – altLINE
- Starting rate (factoring fee)
- 0.75%
- Offers funding by collecting outstanding invoice payments from your customers
- Funds startups and bad credit borrowers
- Factor fees start as low as 0.75% of the invoice amount
- Charges origination and wire fees
- Requires your customers to be creditworthy
- Fees increase the longer an invoice is unpaid
If you’re sitting on unpaid invoices, you could work with an invoice factoring company like altLINE to receive a cash advance. Although altLINE will run a background and credit check to look for financial-related felonies, it doesn’t set specific credit score, annual revenue or time in business requirements, making it a good option for bad credit businesses.
As part of the approval process, altLINE will consider your outstanding invoices — both their amounts and due dates — as well as the creditworthiness of your customers. You’ll pay a fee per cash advance, which is usually between 0.75% and 3.50% of the invoice amount. Keep in mind that these fees typically increase the longer an invoice is left unpaid.
Learn more about altLINE.
Invoice factoring companies base eligibility on your invoice history, so you won’t need to meet minimum credit score, time in business or annual revenue requirements. Instead, eligibility will depend on your outstanding invoices and the creditworthiness of your customers.
Best for: Microloans – SBA
- Starting rate (interest rate)
- 8.00%
- Available in all states
- Interest rates are capped by the SBA
- Flexible eligibility criteria compared to other SBA loan types
- May require collateral and/or personal guarantee
- Slower funding speed than other types of business financing
- Can’t be used to pay existing debts or purchase real estate
SBA loans are partially guaranteed by the U.S. Small Business Administration (SBA), which minimizes risk for lenders and allows for more affordable, flexible loan terms. While other SBA loans have stricter eligibility requirements, the SBA microloan is designed to provide funding for early-stage businesses in underserved markets — including those with limited credit history.
Microloans offer amounts up to $50,000, though the average SBA microloan is only about $13,000. To apply, you’ll need to work with an SBA-approved lender. You can search for intermediaries in your area to find a lender that fits your needs.
However, keep in mind that SBA loans can be slower to fund than other types of business loans, so this option isn’t ideal for businesses seeking fast funds.
To be eligible for an SBA microloan, your business must be physically located and operating in the U.S. or U.S. territories. Your lender may set additional criteria, like a minimum credit score or time in business requirement.
Best for: Seasonal businesses – Fora Financial
- Starting rate
- 13.00%
- Low time in business requirement
- Payments fluctuate alongside your revenue
- Funds available in as little as 24 hours
- High annual revenue requirement
- Doesn’t report to credit bureaus
- Factor rates make it challenging to compare against other loan offers
If you run a seasonal business with revenue that fluctuates throughout the year, you might prefer to have payments that fluctuate alongside your cash flow. This is why Fora Financial is our top pick for seasonal businesses, offering cash advances up to $1,500,000 that are repaid through a set percentage of your daily or weekly revenue.
However, you’ll need an annual revenue of $240,000 or more to qualify, and if you’re looking to build business credit you should be aware that Fora Financial does not report to the major credit bureaus.
Read our full Fora Financial review.
In order to qualify, you’ll need to meet Fora Financial’s criteria of:
- Minimum credit score: 570
- Minimum time in business: 6 months
- Minimum annual revenue: $240,000
What is considered bad credit for a business loan?
Most lenders consider both your personal and business credit scores when determining your eligibility for a small business loan. Having “bad credit” typically refers to a personal FICO Score below 670. Lenders may focus more on your personal credit history if your business is relatively new.
Bad credit business loans typically require a personal credit score of 500 or higher. Rates tend to be more expensive, although shopping around can help you secure a better deal.
Types of bad credit business loans
There are multiple financing options for business owners with bad credit. Here are some common types of business loans for businesses with lower credit scores.
Small business term loans provide a lump sum of cash to be used for a range of business needs. Short-term loans typically have repayment terms ranging from three to 24 months and might require daily or weekly payments. Long-term loans have terms from five to 25 years and payments are usually made monthly.
A business line of credit allows you to withdraw cash up to your approved limit as often as needed, only paying interest on what you use. Some function similarly to a credit card, while others treat each draw like a separate installment loan.
Equipment financing helps small businesses buy or replace equipment like commercial vehicles and machinery. Equipment lenders are often willing to work with bad credit companies, including startups, since the equipment can act as collateral and reduce lender risk.
Invoice factoring lets a business get cash by selling its unpaid invoices to a factoring company. Invoice factoring is lower risk for the lender because your company’s invoices secure the loan. However, this type of financing won’t help you build your credit.
A merchant cash advance (MCA) isn’t a loan, but it provides a lump sum that is repaid with a set percentage of your future debit and credit card sales. This is a popular option for bad credit borrowers, as eligibility primarily depends on your revenue. However, MCAs tend to be a costly way to borrow.
How LendingTree helps you find the best rate
Bad credit doesn’t mean your business is out of options. Whether you’re rebuilding, growing or just getting started, LendingTree can help you find and compare your loan options.
Tell us what your business needs
Fill out one form to identify lenders that might be a match for your business. It only takes an average of two minutes to tell us who you are and how much money you need. The process is free, simple and secure, and getting quotes won’t impact your credit score.
Compare your offers
We’ll do our best to match you with offers from trusted lenders who are open to working with businesses with less-than-perfect credit. You can compare your quotes to find the best deal.
Get your funding
Choose an offer, sign your loan agreement and use the money to grow, stabilize or seize new opportunities. Depending on your lender, you could receive your funds in as little as 24 hours.
How to get a business loan with bad credit
Once you identify a lender that accepts your credit score, here are the steps you can take to get a business loan.
1. Calculate how much debt you can afford
Borrowers with low credit scores tend to receive steep business loan interest rates, so keep this in mind when you’re deciding how much funding to request.
While longer repayment terms could make your payments more affordable, you’ll likely end up paying more in interest over the life of the loan. With a shorter term, the amount of each loan payment may be higher, but you’ll generally pay less in total interest.
2. Prepare your application documents
While required documents vary between lenders, be prepared to supply some of the following:
- Business plan
- Business and/or personal bank account statements
- Personal and business tax returns
- Business registration and licenses
- Employer Identification Number (EIN)
- Financial statements, including:
- Certificate of good standing
You can generate many of the financial statements you need directly in your accounting software, while tax returns can usually be downloaded from your business tax software.
3. Get quotes and compare lenders
Getting quotes from multiple sources gives you a better chance of approval, and it can help you secure a better rate. You can use a marketplace like LendingTree to get multiple quotes at once. It’s also a good idea to check with your bank — some banks may offer special deals, like better rates, for existing customers.
4. Understand your loan agreement
Make sure you understand every aspect of your business loan agreement to avoid surprises or penalties down the line. Review these critical components of your loan agreement:
- How much you’ll be borrowing and repaying
- The terms that determine your repayment schedule
- Penalties for early or late payments
- Whether a personal guarantee is required, which would make you personally responsible for the debt
If you’re comfortable with all the terms and conditions of your loan agreement, you’re ready to move forward with your business loan. If you don’t understand any of the terms, or are surprised by what you find in the agreement, talk with your lender before signing.
Lenders typically don’t want to offer loans to business owners they see as risky, so finding ways to make yourself a less risky borrower can help you get approved for a loan at the best rate.
- 1. Choosing a secured loan, which uses business assets like equipment, inventory and real estate as collateral, reduces lender risk because the lender can seize your pledged assets if your business defaults on the loan. But it also puts your assets at risk if you miss payments.
- 2. Adding a creditworthy cosigner can often improve your odds of receiving a business loan. However, it’s a lot of responsibility for the cosigner, who will ultimately be responsible for the loan if your business defaults. And not all lenders allow cosigners.
- 3. Checking your credit score before applying can help you narrow down your list of lenders and skip any lenders where your application will be automatically disqualified on credit alone. You can check your personal credit score for free with LendingTree Spring.
How to compare bad credit business loans
Here are four key factors to consider as you compare bad credit business loan options:
-
Type of lender
Do your research on prospective lenders by reading lender reviews. Traditional banks and credit unions tend to have strict eligibility criteria. According to the Federal Reserve, businesses seen as a high credit risk are more likely to be approved with online lenders, though these lenders usually have higher rates. -
Type of loan
Make sure the loan type suits your needs. For example, if you’re looking for funds to cover a one-time expense, a term loan might be ideal. But if you’re looking for ongoing funding, a line of credit could be a better option. -
Time to funding
Some lenders can deposit funds in your business bank account as soon as the same day you apply, while others may take several weeks to review your application and fund your loan. If your needs are urgent, pay close attention to this detail. -
Rates and fees
Read the fine print to ensure you understand all loan costs, including interest rates and fees. If you doubt what something means, reach out to the lender for clarification. It’s important to compare loan costs to find the best deal for your business.
There are three main factors that impact the total cost of a business loan: the loan amount, the repayment term and the annual percentage rate (APR). These same factors also impact the size of your recurring loan payments.
To compare loan offers, consider monthly and total costs. You can begin by reviewing your business budget to determine the amount of money you’re able to put toward loan payments on a monthly basis. You’ll use this number to determine which loan offers you can afford.
As you gather quotes, use a loan calculator to check if the monthly payment aligns with your budget. If the lender requires daily or weekly payments, keep this in mind as you do your calculations. Once you’ve eliminated any loans with payments you can’t afford, look at the total cost of each loan to find the best deal possible for your business.
To make an apples-to-apples comparison, it’s ideal to know the APR for each of your loan options, as this number represents the total cost of borrowing including both interest and fees. If a lender only reveals their flat interest rate, keep in mind that additional fees will likely increase costs.
Pros and cons of getting a business loan with bad credit
Pros
-
Access to extra funds
Small business financing can help cover a range of expenses, such as investing in new equipment or filling financial gaps during slow seasons. -
Could raise your credit score
If you make timely payments on your bad credit loan, your credit score could improve, which might allow you to qualify for more affordable financing in the future.
Cons
-
Higher overall costs
Applicants with bad credit are seen as riskier borrowers, so they tend to receive higher interest rates. -
Smaller loan amountsBorrowers with bad credit typically receive lower borrowing limits.
-
Closer scrutiny
If you have poor credit, lenders may put a larger emphasis on your business finances, with some setting high annual revenue requirements.
Is a bad credit loan a good idea?
If your business needs cash to cover emergency expenses or capitalize on an opportunity that won’t be around forever, a bad credit business loan might make sense — but acquiring debt isn’t always the right move.
Based on data from the Federal Reserve, 76% of business owners with a personal credit score below 620 or a business score below 50 reported issues paying operating expenses in 2024, while 60% struggled to make payments on their existing debt. In response to these challenges, more than half of low-credit companies made a late payment or skipped a payment entirely.
Taking on a bad credit business loan is only worthwhile if you can keep up with the loan payments. If the additional debt is going to put further strain on your business finances, it’s better to spend some time improving your credit score so you can apply for more affordable financing in the future.
Here are a few things you can do to boost your credit:
-
Pay your bills on time
Paying promptly (and early, if possible) will do wonders for your credit score. You don’t need to pay the whole balance if it’s a stretch — just make sure to meet the minimum. -
Reduce debt
Watch your overall spending and start putting any extra money toward the forms of debt with the highest interest rates. Slowly, you’ll bring your credit utilization ratio down, improving your score in the process. -
Monitor your credit
Occasionally, a credit bureau may make an error on your credit report. You can request a free copy of your report directly from one of the credit bureaus, and you can dispute any incorrect information to have it corrected. -
Watch your business credit
Your business can also build business credit. Keep an eye on your business credit report to check for any mistakes. You can request a report from business credit bureaus like Dun & Bradstreet, though there may be a fee.
Alternatives to bad credit business loans
Small business grants
Small business grants can help businesses with a limited credit profile take their business ideas to the next level. Although grants can be competitive, it’s worth searching for ones that fit your criteria to see if your business is eligible for any funds that won’t need to be repaid.
Business credit cards
Business credit cards have more lenient credit score requirements than business loans. Just keep in mind that business loans are generally a better choice for long-term funding because they offer larger amounts with lower rates.
Crowdfunding for business
You could crowdfund donations from friends, family and your customer base. In return, you can offer rewards, incentives or discounts for future services. Crowdfunding generally works best if you have a strong social media following.
Frequently asked questions
Yes, you may be able to get a business loan if you have bad credit. Several alternative business lenders approve applicants with personal credit scores as low as 500. Make sure you meet a lender’s additional requirements, including time in business or annual revenue.
It’s generally recommended to have a FICO Score in the mid to high 600s when securing small business financing. However, some lenders may accept scores as low as 500, although these loans tend to come with higher rates and fees.
Watch out for advertisements for business loans with no credit check. Reputable business lenders typically run a credit check as part of the application process, even if looking at other factors beyond your credit profile.
The Small Business Administration (SBA) doesn’t set a minimum credit score for securing an SBA loan. However, depending on the type of SBA loan, your lender may require a personal credit score of 680 or higher. The SBA may also require a minimum business credit score of 155 as measured by the FICO Small Business Scoring Service (SBSS). Your chances of receiving an approval increase as your score improves.
Certain types of business financing are better suited for business owners with low credit, such as working capital loans, invoice factoring and merchant cash advances. Financing that requires collateral, like equipment or inventory, may also be easier to obtain because collateral reduces the risk for lenders.
If a bank rejects your loan application, consider applying with another lender. Each lender has different requirements and eligibility criteria, so shop around to find one that’s more receptive to working with your current situation. You should also consider other forms of business financing, such as invoice factoring, accounts receivable factoring and merchant cash advances, as these are typically less dependent on credit.
Getting a bad credit loan to start a business may be a challenge since many lenders have a minimum time in business requirement. Fortunately, some lenders offer loans to businesses open for just three months and with credit scores as low as 500.
If you still don’t qualify, or if the rates aren’t in your budget, consider business credit cards, borrowing from friends or family or try crowdsourcing the funds. You can even try applying for small business grants — though be prepared for some stiff competition.
Our methodology: How we chose the best business loans for bad credit
We reviewed the leading small business lenders to determine the overall best business loans for bad credit. To choose the lenders on our list, we considered the following criteria:
-
Minimum credit score
We considered business lenders with a minimum credit score of 625 or lower. -
Other eligibility criteria
To highlight options for new and established businesses, we included lenders with a range of time in business and annual revenue requirements. -
Rates and terms
We prioritized lenders with competitive rates, limited fees and flexible repayment terms. -
Repayment experience
We considered each lender’s reputation and business practices, favoring lenders that report to all major credit bureaus and offer reliable customer service.