Best Business Loans for Bad Credit in March 2024

Don't let a low credit score limit your potential.

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Best business loans for bad credit in March 2024

By Jill A. Chafin and Janet Berry-Johnson | Edited by Abigail Bassett and Janet Schaaf | February 27, 2024
How Does LendingTree Get Paid?
LendingTree is compensated by companies on this site and this compensation may impact how and where offers appear on this site (such as the order). LendingTree does not include all lenders, savings products, or loan options available in the marketplace.

How Does LendingTree Get Paid?

LendingTree is compensated by companies on this site and this compensation may impact how and where offers appear on this site (such as the order). LendingTree does not include all lenders, savings products, or loan options available in the marketplace.
LenderUser ratingsBest for…Max. loan amountTerm lengthMin. interest rateMin. credit score
(692)
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Short-term loans$250,000Up to 24 months35.40%625Get Business Loan Offers
(27)
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Working Capital$1,500,0004 to 15 months1.10 factor rate500Get business loan offers
User ratings coming soonLines of Credit$250,0006 or 12 monthsNot disclosed625Get Business Loan Offers
(155)
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Equipment financing$2,000,00012 to 84 months4.99%550Get business loan offers
(98)
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Unsecured loans$500,0004 to 24 months1.11 factor rate600Get Business Loan Offers
Fundbox logo
(30)
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Startups$150,0003 or 6 months4.66%600Get business loan offers
(20)
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Fast funding$400,0003 to 15 months1.11 factor rate500Get Business Loan Offers
User ratings coming soonInvoice factoring$5,000,000Not applicable0.75% factor feeNoneGet business loan offers
User ratings coming soonMinority entrepreneurs$250,00012 to 60 months8.49%Not disclosedGet Business Loan Offers
Not availableMicroloans$50,000Up to 72 months8.00%Varies by lenderGet Business Loan Offers
Learn more about how we chose our picks.

Bad credit lenders at a glance

OnDeck: Best bad credit business loan for short-term loans

Loan amounts$5,000 to $250,000
Starting interest rate35.40%
Term lengthUp to 24 months
Minimum credit score625
Minimum time in business12 months
ProsCons

 Funds can be used for a range of small business expenses

 On-time payments can help build business credit

 Same-day funding is available in certain states

 Must have an annual revenue of $100,000 or higher to qualify

 Doesn’t lend to businesses in North Dakota

 High interest rates

Fora Financial: Best bad credit business loan for working capital

Loan amounts$5,000 to $1,500,000
Starting interest rate1.10 factor rate
Term length4 to 15 months
Minimum credit score500
Minimum time in business6 months
ProsCons

 Funds can be used for almost any business expense

 Early payoff discount

 Short time-in-business requirement


 Only offers two funding options

 High annual revenue requirement

 Doesn’t report to credit bureaus

Bluevine: Best bad credit business loan for lines of credit

Loan amounts$6,000 to $250,000
Starting interest rateNot disclosed
Term length6 or 12 months
Minimum credit score625
Minimum time in business24 months
ProsCons

 Only pay interest on withdrawn amounts

 No maintenance fees or prepayment penalties

 Funds available as soon as 24 hours

 High annual revenue needed to qualify

 Doesn’t lend to businesses in Nevada, North Dakota or South Dakota

 Short repayment terms

Taycor Financial: Best bad credit business loan for equipment financing

Loan amounts$500 to $2,000,000
Starting interest rate4.99%
Term length12 to 84 months
Minimum credit score550
Minimum time in businessStartup
ProsCons

 Ideal for startups

 No minimum revenue requirements

 Offers 100% equipment financing with no down payment

 Personal guarantee may be required

 Charges a document fee (not publicly disclosed)

 Stricter eligibility requirements apply for equipment refinancing

National Funding: Best bad credit business loan for unsecured loans

Loan amounts$5,000 to $500,000
Starting interest rate1.11 factor rate
Term length4 to 24 months
Minimum credit score600
Minimum time in business6 months
ProsCons

 Funding in as little as 24 hours after approval

 Early payoff discount

 High funding limits

 Factor rate makes it hard to compare other offers

 Annual revenue of $250,000 or higher needed to qualify

 Requires daily or weekly payments

Fundbox: Best bad credit business loan for startups

Loan amountsUp to $$150,000
Starting interest rate4.66% for 12-week term
8.99% for 24-week term
Term length3 or 6 months
Minimum credit score600
Minimum time in business6 months
ProsCons

 Receive a lending decision within minutes

 No application, origination or early repayment fees

 Next-day funding available

 Annual revenue of $100,000 needed to qualify

 Short repayment terms

 Doesn’t fund all industries

Credibly: Best bad credit business loan for fast funding

Loan amounts$5,000 to $400,000
Starting interest rate1.11 factor rate
Term length3 to 15 months
Minimum credit score500
Minimum time in business6 months
ProsCons

 Low credit score requirement

 Offers multiple loan options

 Same-day funding available

 Daily or weekly payments required

 High annual revenue requirements

 Factor rate makes it hard to compare with other offers

altLINE: Best bad credit business loan for invoice factoring

Funding limitsUp to $5,000,000
Advance rateUp to 90%
Starting interest rate0.75% factor fee
Minimum credit scoreNone
Minimum time in businessNone
ProsCons

 Funds startups and bad-credit borrowers

 Supported by an established banking institution

 Factor rates start as low as 0.75%

 Origination and wire fees

 Requires client’s customers to be creditworthy

 Slightly longer funding times compared to competitors

Accion Opportunity Fund: Best bad credit business loan for minority entrepreneurs

Loan amounts$5,000 to $250,000
Starting interest rate8.49%
Term length12 to 60 months
Minimum credit scoreNot disclosed
Minimum time in business12 months
ProsCons

 Prioritizes people of color, women and low-income entrepreneurs

 Flexible repayment terms

 Offers business coaching and mentorship

 Must be a U.S.-based company to qualify

 Annual revenue of $50,000 or more needed to qualify

 Not available in all states

SBA: Best bad credit business loan for microloans

Loan amountsUp to $50,000
Starting interest rate8.00%
Term lengthUp to 72 months
Minimum credit scoreVaries by lender
Minimum time in businessStartup
ProsCons

 Loans ideal for diverse and low-income business owners

 Less strict eligibility criteria compared to other SBA loans

 Capped interest rates set by the SBA

 Longer processing times compared to other types of business financing

 No set standard for minimum credit score requirement

 Business must be physically located and operating in the U.S. or U.S. territories

What is a bad credit business loan?

Most lenders review your personal and business credit scores when determining your eligibility for a small business loan. Having “bad credit” 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.

Unfortunately, no-credit-check business loans aren’t available. And although there are no-credit-check personal loans, it’s generally not wise to use personal loans for business purposes.

Types of bad credit business loans

Poor credit business financing comes in many forms, from traditional term loans to specialized equipment or invoice financing. These types of funding may have low credit requirements or require collateral to reduce the lender’s risk.

Here are some common types of business loans that cater to bad credit borrowers.

Term loans

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, while long-term business loans have terms going as high as 120 months.

Secured loans

Business owners usually need to offer up fixed or financial assets as collateral to obtain a secured business loan. Having collateral can often help you get a better rate with more flexible terms since the lender can seize the collateral to recoup costs if your business defaults.

Lines of credit

A business line of credit, or a revolving line of credit, is similar to a business credit card. Once approved, you can withdraw cash up to your approved limit as often as needed, only paying interest on what you use.

Working capital loans

A working capital loan can help fund day-to-day operations like payroll services, purchasing inventory or covering seasonal lulls. Credit requirements for businesses looking for working capital loans may be lower, making it an ideal choice for bad-credit applicants.

Equipment financing

Equipment financing can help businesses buy or replace expensive equipment like commercial machinery, vehicles or manufacturing tools. Equipment lenders are typically willing to work with bad-credit companies, including startups, since the equipment acts as collateral and helps reduce lender risk.

Invoice factoring

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.

Merchant cash advances

Businesses with bad credit may consider a merchant cash advance since lenders consider a company’s sales figures more than credit scores. Once approved, you’ll receive a lump sum that typically needs to be repaid daily through automatic deductions from the business’s credit card and debit card sales. Since the payback is automatic, cash advance lenders receive the funds directly.

Where to get a business loan with bad credit

Businesses with bad credit might struggle to meet typical small-business loan requirements for traditional business financing. However, the following lenders can provide funding options for businesses with less-than-ideal credit profiles.

  • Online lenders: Alternative lenders utilize a streamlined online application process to offer less-strict eligibility requirements and quick funding times, often looking beyond credit scores. Some online lenders even offer same day business loans, although these quick loans usually come with higher fees and less flexible terms.
  • Microlenders: If you need a small loan of $50,000 or less, consider applying for a small-business microloan. Provided by nonprofit organizations or government agencies, microloans are designed to help underserved entrepreneurs start, grow and expand their businesses. Microlenders typically offer competitive interest rates and fewer fees.
  • CDFIs: Community Development Financial Institutions (CDFIs) are private financial institutions dedicated to helping low-income, low-wealth and other disadvantaged people and communities access economic opportunities. You can find CDFIs that support your local community through the Opportunity Finance Network or a Small Business Development Center.
  • Your current bank: Traditional bank and credit union business loans are typically reserved for well-established businesses with a robust credit profile. However, a bank you have an existing relationship with may be willing to consider other mitigating factors, like a positive cash flow, your history with the bank and additional cash resources and reserves.
  • Your business cash flow: Lenders typically don’t consider your credit score when you apply for alternatives to traditional small business loans, such as invoice factoring, accounts receivable factoring and merchant cash advances. In general, they’re more concerned with your cash flow and the creditworthiness of your customers.

How to get a business loan with bad credit

Once you identify a lender that accepts your credit score range, here are seven steps you can take to get a bad-credit business loan.

1. Calculate how much debt you can afford

Low-credit borrowers typically receive steep business loan interest rates, so keep this in mind when deciding how much funding to request. Taking on debt that you can’t afford to repay will only hurt your credit score further.

While securing longer repayment terms could make your payments more affordable, you will likely end up paying more interest over the life of the loan. Short-term loans typically require high payments, but you’ll generally pay less in total interest.

 Use our business loan calculator to estimate how much you could borrow.

2. Check your credit scores.

Before starting the business loan application process, you can check your personal credit score for free with LendingTree Spring. With this information, you’ll better understand which lenders you can approach.

For established companies, you should also obtain a copy of your business credit report.

3. Improve your credit to get better rates.

Here are some ways to boost your credit score to help unlock more attractive business loan rates and terms.

  • 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 debt with the highest interest rate. Slowly, you’ll bring your credit utilization ratio down, improving your score in the process.
  • Renegotiate interest rates: Consider contacting your creditors to see if they’d be willing to negotiate the interest rate. You can also consider consolidating business debts for better interest rates.
  • Monitor your credit: Occasionally, a credit bureau will make an error on your credit report. You can request a free 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.
  • Watch your business credit: Your business also has business credit, which lenders can access — often without your knowledge. Keep an eye on your business credit report to double-check for any mistakes. You can request a report from business credit bureaus like Dun & Bradstreet.

Whether you decide to get a business loan with bad credit or wait until your credit score improves, make sure to 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 and help you get better rates and terms for future financing needs.

4. Consider a cosigner.

Adding a creditworthy cosigner can often improve your odds of receiving a business loan. However, not all lenders allow cosigners. Furthermore, it’s a big responsibility for your cosigner, since they’ll ultimately be responsible for the loan if your business defaults.

Make sure to discuss the pros and cons with your business partners and your cosigner to ensure everyone knows what’s involved.

5. Prepare your application documents.

While the exact paperwork required to secure a business loan will vary by lender, be prepared to supply some of the following documents:

Applying with these documents could help offset your poor credit and help you appear trustworthy as a borrower. Plus, organizing your paperwork ahead of time could speed up the application and approval process.

6. Offer collateral to secure funding.

Offering business assets as collateral could improve your chances of being approved for financing since lenders can seize the collateral to recoup losses in the case of default.

Acceptable forms of collateral may include hard assets like equipment, fixtures, inventory or commercial property. Future earnings, such as accounts receivable and unpaid invoices, may be used as collateral.

Watch out for loans that may require you to pledge personal assets (your personal car or home, for example) as collateral to secure financing.

7. Understand your loan agreement.

Make sure you understand all aspects 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 your business loan agreement details, you’re ready to move forward with your bad-credit business loan.

How to compare bad-credit business loans

Having bad credit may feel like you have minimal choices when it comes to business financing. However, after shopping for potential lenders, you may find more options than anticipated.

Here are four key factors to consider when looking for small-business funding for bad credit:

Loan options: Make sure the type of loan suits your immediate needs. For example, if you want to purchase commercial property for your business, you’ll need to apply for a commercial real estate loan. Fine-tune your business budget to make sure the loan amount will cover what you need.

Overall costs: Read the fine print to ensure you understand all included costs, such as interest rate, origination or document fees and prepayment penalties. If you doubt what something means, reach out to the lender for clarification.

Time to funding: You may need the funds immediately, in which case a seven-day approval process won’t work.

Compare lenders: Sadly, many sketchy alternative and online lenders are ready to prey on your less-than-stellar credit score. Do your research on prospective lenders by reading lender reviews and customer feedback on sites like Trustpilot and Better Business Bureau.

Pros and cons of bad credit business loans

ProsCons

 Access to extra funds: Growing your business might be challenging given your current revenue. A small business loan can help cover a range of expenses, such as investing in new equipment, covering payroll costs or filling financial gaps during low-earning months.

 Possibility of raising your credit score: Successfully paying off a bad credit loan can show you’re a reliable borrower. In turn, this might allow you to apply for more affordable financing options.

 Higher overall costs: Lenders view applicants with bad credit as riskier borrowers. As a result, they tend to increase your interest rate, which could negatively impact your business’s financial health.

 Closer scrutiny: Having bad credit means most lenders will want to scrutinize all your finances, including statements, tax returns, invoices, cash flow and more.

 May qualify for smaller amounts: Bad-credit loans typically have lower borrowing limits.

Alternatives to bad-credit business loans

Small-business grants

Provided by government organizations, nonprofits and private corporations, small-business grants can help new businesses or those with a limited credit profile take their business ideas to the next level. Although business grants can be competitive, it’s worth searching for ones that fit your criteria in order to access free money for your company.

Business credit cards

Business credit cards typically have more lenient eligibility and credit score requirements than business loans. You may even notice a significant improvement to your personal credit score after making on-time payments.

Just keep in mind that business loans are generally a better choice for long-term funding since they can offer more significant funding amounts with lower rates.

Crowdfunding for business

You can create a GoFundMe for business campaign to collect donations from friends, family and your fan base. In return, you can offer rewards, incentives or discounts for future services. Crowdfunding generally works best if you have a strong social media presence and following.

How we chose the best business loans for bad credit

We reviewed the leading small-business lenders to determine the overall best 10 business loans for bad credit. To make our list, lenders must meet the following criteria:

  • Minimum time in business: Funding options for all stages of business ownership, from startups to those operating for 24 months or longer.
  • Minimum credit score: Personal credit score requirements ranging from 500 to 625.
  • Repayment terms: Loan products that offer a range of repayment terms from three to 72 months.
  • Rates and fees: We prioritize lenders with competitive rates, limited fees, flexible repayment terms, a range of loan amounts and APR discounts.
  • Repayment experience: We consider each lender’s reputation and overall business practices. We also favor lenders that report to all major credit bureaus, offer reliable customer service and provide customer perks, like free business coaching or business rewards.

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.

Business mentors recommend having 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 also may 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 rejected 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 for starting 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 six 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 for this “free money.”