In the past, borrowers with poor credit were offered loans that often included exorbitantly high interest rates and unfair repayment periods. With today's technologies, lenders must now compete for this share of the financial market by offering more competitive terms to this type of borrower.
| Financially Reviewed by Somer G. Anderson, CPA, on 6.1.2021 |
| Today, it is possible to get a loan even with bad credit and a poor FICO score. On this page, our experts will recommend top business loans you can apply for even if you have bad credit. We will also walk you through the process of selecting a loan based on your credit score and business needs. |
Too busy for the full read? Here's the summary of the Best Business Loans for Bad Credit in 2022
Let’s now take a closer look at the best business loan for bad credit. Our experts in the field have put together the following overview of the top business loans for businesses with bad credit.
Credibly offers an array of loan options. They are well-known for their working capital loans, long-term business loans, lines of credit, and SBA loans. Credibly’s working capital loans are determined based on a business’s current assets minus current liabilities.
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Loan amounts vary from $5,000 - $4000,000. Most entrepreneurs can get funding within 48 hours (however it might take 5 days). You can select from a range of loan products, such as:
Credibly is also a SBA loan provider. As a federally-backed option for financing, SBA requirements can be quite stringent. In general, the application process has tougher qualifying criteria than those demanded by other loan types. Yet, with low APRs and a broad range of usage options, SBA funding programs are worth exploring as a means to start or grow your business.
Final thoughts
Credibly offers a greater variety of loans than most other loan providers. As long as your business meets their application credentials, you will likely find a loan that fits your business needs with Credibly. Read full Credibly review.
Fundbox has two types of business loans: lines of credit and term loans. For both loan types, a business is given a down payment of money, which they will need to repay with interest. However, term loans have set repayment rates and an intended last payment, whereas lines of credit loans generally stay open with a financial institution indefinitely. Fundbox integrates with accounting software, allowing for easy tracking of loans.
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Fundbox’s lines of credit are designed for B2B businesses that tend to experience gaps in cash flow from unpaid invoices.
Fundbox does not charge interest on its lines of credit, but rather it takes a fixed, weekly fee, which you are required to pay with each withdrawal. You can gain an estimate of the minimum total fees associated with a withdrawal and minimum weekly payments by making use of a calculator of Fundbox’s website. However, note that this calculated amount will provide you with the lowest amount Fundbox charges for these terms.
Final thoughts
A Fundbox line of credit is suitable for small businesses that are not able to qualify for a bank loan - or for businesses that don’t have time to apply for traditional loans. Read full Fundbox review.
Founded in 2013, BlueVine has provided over $9 billion in financing to over 200,000 of its clients. This lender tailors its loans to small businesses. It has invoice factoring with credit lines of up to $5 million and business lines of credit of up to $250,000.
BlueVine offers two main sources of funding for businesses: invoice factoring and lines of credit.
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BlueVine has invoice factoring - a kind of business financing option for business to business (B2B) businesses, whereby unpaid invoices are sold at a discounted rate. If your business doesn’t process invoices, BlueVine also has traditional lines of credit.
BlueVine has simplified and streamlined the process of invoice financing. With BlueVine you have more control over which invoices you select to finance (when compared with traditional invoice financing services) and you won’t need to pay a lot of extra fee or sign any long-term contracts.
BlueVine’s Business line of credit or invoice factoring could be suitable for your business if you need cash quickly, have B2B clients who don’t pay on time, or if you don’t fulfill the credit requirements specified by other lenders.
Final thoughts
BlueVine’s fee can be slightly expensive, however, BlueVine provides transparent services that are simple to qualify for, and helpful for businesses who experience cash flow issues.
Kiva allows entrepreneurs and small business owners from across the globe to post a crowdfunding link on their website. Kiva, is a nonprofit organization and takes no direct interest or stake in your business. However, Kiva can’t guarantee funding for your business. Kiva also sets a cap of $15,000 for loan amounts.
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Kiva provides microfinance loans via a crowdsourcing platform, These loans are interest-free up to $15,000 and are repayable over a 36-month period. Microlending is based on the concept that businesses in need are funded by many lenders whose finances are collectively gathered together to meet the financial requirements of an individual borrower.
Microfinancing loans are suitable for businesses that require a short term infusion of capital. Kiva offers microfinance loans of up to $15,000 with rates starting from 0.00% for the duration of the loan.
Final thoughts
Kiva offers the most accessible small business loans for minorities with bad credit and small business loans for women with bad credit. In our expert opinion, Kiva fits a very specific type of business and you’ll often know if your business fits that description once you place your business on their platform. Read full Kiva review.
OnDeck offers flexible loan rates. OnDeck has two types of loans: term loans and lines of credit. Each of these loan types have their advantages. You will need to consider which stage your business is at when deciding which type of loan will best suit your business needs.
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OnDeck assesses business performance according to several performance factors, and not just the personal credit history of the business owner. OnDeck offers up to $5000,000 in term loans with maximum terms of 36 months and lines of credit of up to $100,000 with a maximum repayment period of 12-months.
Final thoughts
OnDeck is a solid funding option for businesses that have fair to average credit score, require cash quickly, and have unsteady cash flow or unseen expenses. Read full OnDeck review.
There are many different types of small business loans for people with bad credit. Each type of loan has its own advantages. Here is a summary table of the best business loans for bad credit available in 2022.
Lender | Best for | Minimum Credit Score | Minimum Time In Business | Loan Amount | Interest Rate |
Working capital loans | 500+ | 6 months | Up to $400,000 (But varies on credit) | Factor rate as low as 1.15% | |
Line of credit | 550 | 3 months of invoicing | $150,000 | 4.66% for a 12-week term, 8.99% for 24-week term | |
Invoice factoring | 530 | 2 years | Up to $5,000,000 | 0.25% Weekly | |
Crowdfunding | N/A | N/A | Up to $15,000 | 0% (Repayment period is three years) | |
Term loan | 600 | 6 months | $100,000 | Start at 35% annually |
You may be applying for funding to support your business, yet most lenders will still take your personal credit score into consideration. Your FICO credit score is based on several factors, called the 5 C’s of credit: character, capacity, capital, conditions, and collateral. Lenders use these factors to see, for example, how many payments you have met on time, if you repay your debts and your debt-to-income ratio. FICO is the most common model used to determine creditworthiness.
The FICO model credit score ranges for are:
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Bad credit is typically used in reference to a FICO score of 300-629. Traditional lenders generally reject entrepreneurs with a poor FICO score. Yet, if you have a score that is in the lower range, you still can secure a bad credit business loan. Some alternative lenders concentrate on the future of your business rather than what has determined your poor credit score in past years.
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You can get the capital you require to enhance and develop a small business, even with bad credit. There are in fact only three steps to getting a small business loan with bad credit:
1. Learn About Your Personal Credit Score
Lenders use your business and personal credit scores to assess how risky it could be to lend you money. As these scores can impact your potential to get funding for your business, getting to know your credit score and bettering your credit score before you apply for a business loan will help you choose the top financing option.
2. Check The Eligibility Requirements Of Each Loan
For each loan type and lender there are requirements you will need to meet to achieve approval. Traditional business loans often require the following:
Research the requirements for all the small business financing options you are considering. Decide which bad credit small business loan offers the best chances for loan approval.
3. Select the Best Loan Option for Your Business
There are a vast choice of financing options for entrepreneurs with bad credit, aside from traditional loans. When you look at different financing options, look at the lender’s repayment terms and eligibility requirements. You should also consider the lender’s reputation. You can read reviews and talk with service representatives.
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Here are some factors that could contribute to your eligibility for a loan*:
| *These are only benchmarks and do not constitute actual approval odds for financing. |
A bad credit score may prevent you from getting an excellent APR, however, you can still get a loan with interest rates that are considerably lower than those you would probably find on payday loans. Our experts have outlined and recommended the top bad-credit loans for businesses. Now all that’s left is for you to decide which bad-credit loan suits your business the best.
In conclusion, here are our recommendations for the top small business loan types for businesses with bad credit.
