Business Loans

Bad Credit Business Loans: Do They Exist?

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Getting a business loan with impaired credit can feel nearly impossible, but there are several bad credit business loans you could consider.

Lenders use your score as a measure of creditworthiness — the higher the score, the more likely you are to pay back your loan, which means less risk for the lender. Generally, a personal credit score of 600 or lower is less desirable in the eyes of a lender, but business loans are available to those with credit scores as low as 500. If you fall in that category, find out which business loans for bad credit could provide a solution.

Types of business loans for bad credit applicants

Though businesses with bad credit don’t have as many financing options available, there are several methods they can use to get the cash they need:

  • Term loans from alternative lenders: Online lenders often employ nontraditional factors to determine whether or not to give a business a loan; these include measures from sales projections to social media followers. Alternative lenders offer both short and long-term loans, depending on the business’ needs. The loan application and funding process are much quicker and simpler with alternative lenders than with their traditional counterparts.
  • Secured loans: To obtain a secured loan, a business owner offers up something valuable as collateral. This often makes it possible to get a secured loan with poor credit, as the lender can take the collateral to recoup some costs if the business defaults. While this means less risk for the lender, it’s a tremendous risk for the business owner.
  • Cosigned loans: Sometimes, businesses with bad credit will bring on a partner with good credit to cosign for a loan. Cosigning means that person is responsible for the debt if the business defaults. It is a gamble for the cosigner, but can help the business get access to cash.
  • Working capital loans: These short-term business loans are used to fund day-to-day operations. They are quick to fund and businesses don’t typically need to meet many requirements to get one. A business with very bad credit can get a working capital loan by putting valuable assets up as collateral.
  • Equipment financing: Often, the most expensive investments businesses need to make are in equipment like commercial machinery, vehicles or manufacturing tools. Equipment financing lets businesses buy this equipment by paying little by little over time (plus interest). Even businesses with bad credit can finance equipment because the equipment itself is used as collateral. If the business defaults on payment, the lender will repossess the equipment and sell it to make up the difference.
  • Invoice factoring: Invoice factoring, or accounts receivable financing, lets a business get cash immediately by selling its accounts receivables to a factoring company. The business gets money up front (minus fees) and the factoring company collects on the invoices. Invoice factoring involves low risk for the lender because it involves money the business has already made, so it’s a solid option for businesses that can’t get other loans because of bad credit.
  • Merchant cash advance: A merchant cash advance gives a business a lump-sum payment that is paid back daily by automatically deducting a small percentage of its credit card and debit card sales. Businesses with bad credit can get a merchant cash advance because lenders are more interested in the company’s sales figures than its credit score. Since payback is processed automatically based on credit/debit card transactions, lenders are guaranteed that money goes directly to them.

Where to find bad credit business loans

Lender Min. credit score Loan amount Time to funding after approval
National Funding 500 $5,000 to $500,000 24 hours
BlueVine 530 85% to 90% of unpaid invoices, up to $5,000,000 24 hours
FundBox 500 Up to $100,000 line of credit 2 business days
Rapid Finance 550 $5,000 to $1,000,000 1 business day
Credibly 500 Up to $400,000 working capital 1 business day


We’ve put together a list of some online lenders that approve business owners with low credit scores. To be included, lenders needed to meet the following criteria:

  • Minimum credit score no higher than 600.
  • Funding available in one to two days.
  • Loan amounts and requirements available online.

National Funding

National Funding may approve borrowers with scores as low as 500 for small business loans between $5,000 and $500,000. Applicants also need one year in business, at least $100,000 in annual gross sales and three months’ worth of bank statements.

If approved, you could receive money in your account in as few as 24 hours. Borrowers can make daily or weekly payments on four- to 24-month terms. National Funding does not disclose rates for its short-term loans or other bad credit business loans; in addition to interest rates that are likely high, you will also most likely have to pay an origination fee.


BlueVine’s invoice factoring requires a credit score of 530 or higher. B2B business owners with bad credit could qualify to receive 85% to 90% of unpaid invoices up to $5,000,000. As well as your credit score, you would also need just three months in business and at least $10,000 in monthly revenue.

BlueVine would review your last three months of bank statements or your business bank account, your invoices and other basic information about your business, though you may need to provide more documentation if you’re applying for more than $250,000. You could be approved in as few as 24 hours.

As your customers pay invoices to BlueVine, BlueVine would collect a fee and deposit the remaining amount in your account. Weekly fee rates start at 0.25%, as of Feb. 24, 2020.


FundBox offers a revolving business line of credit to applicants with a credit score of at least 500. Business owners also need to be in operation for at least two to three months with $50,000 in annual revenue, although FundBox may approve borrowers who generate less income.

FundBox lines of credit are available up to $100,000 and borrowers only pay for what they use. Interest rates start at 4.66% for a 12-week repayment term. If approved, you could receive funding in two business days.

Rapid Finance

Rapid Finance’s small business term loans require a minimum credit score of 550. Additionally, you must have $50,000 in annual revenue and at least two years in operation. Loan amounts range from $5,000 to $1,000,000 with repayment terms between 3 and 60 months. Rapid Finance does not publicly disclose its interest rates.

You could apply online and receive funding in as little as one day if approved. Your specific loan amount, repayment schedule and fixed rate would depend on your individual needs and the financial standing of your business.


Business owners must have a credit score of at least 500 to qualify for a working capital loan from Credibly. To be eligible, you also need at least six months in business and $15,000 or more in average monthly bank deposits. Credibly would review your bank statements from the most recent three months. If you’re applying for more than $100,000, Credibly would also ask for your most recent business tax return.

Working capital loans are available up to $400,000 and terms span 6 to 18 months. Credibly uses factor rates to calculate the cost of its loans, which are written as a decimal figure rather than as a percentage. You would multiply your factor rate by your loan amount to determine the total amount that you would owe; Credibly’s factor rates start at 1.15, as of Feb. 24, 2020. Once approved, you could receive funds the same day.

How to fix bad credit to get good business loans

Business loans for bad credit can help your business get the money it needs, but they could further damage your credit score in the process. Your debt-to-credit ratio is weighted heavily when calculating your score. Taking on more debt will negatively affect that ratio.

Businesses with poor credit can expect to pay significantly higher interest rates than those with good credit. Over the lifetime of the loan, this can mean an exorbitant amount of money beyond the original loan amount. Businesses with bad credit will also have to deal with more stringent repayment terms. With one bad month, they could fall behind in payments and risk default — there’s not a lot of room for leniency.

If bad credit plagues your business, don’t despair. There are many things you can do to build your score back up so that you can have your pick of business loans.

  • 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 you can’t — just be sure you’re meeting the minimum. Set up auto-pay or calendar reminders if you have a hard time staying on top of payment due dates.
  • Reduce debt: Though paying the monthly minimum is good, getting all the debt paid down is better. You don’t have to do it in one fell swoop, just watch your overall spending and start putting any extra money towards the debt with the highest interest rate. Slowly, you’ll bring your debt-to-credit ratio down, which will improve your score.
  • Renegotiate interest rates: Once you start missing payments, interest rates will soar, which only makes you fall further behind. If you’re really committed to getting your debts paid down, contact your creditors and see if they’d be willing to negotiate the interest rate. You can also consider consolidating debts for better interest rates.
  • Monitor your credit: Occasionally, a credit bureau will make an error on your credit report, so it’s important that you check it to ensure a mistake is not pulling your score down. Examining your score can also help you identify the specific areas where you need to improve. You can request a copy of your credit report directly from one of the credit bureaus, or you can subscribe to a credit monitoring service that will watch your score for you. Your business also has business credit, which lenders could look at as well. Keep an eye on your business credit report to make sure similar mistakes have not been made. You can request a report from business credit bureaus, such as Dun & Bradstreet.
  • Pursue credit counseling: If fixing your score feels too overwhelming, you can meet with a credit counselor who can help you create an actionable plan to start paying down your debts. In many situations, credit counseling is free to companies and individuals in need.
  • Get a business credit card. A business credit card may be easier to obtain than a business loan, as some cards don’t have high credit requirements. Making successful, on-time credit card payments could also help you improve your personal credit score.

Whether you decide to get a business loan with bad credit or wait it out until you can improve your score, make sure you stay on top of your payments and keep your eye on your goals. Successfully managing any business loan, bad credit or not, will show lenders that you can handle debt. This will put you in a better position to access more options, and score your best rates and terms for any future financing needs.


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