Best Business Loans for Bad Credit (2021)

Financially Reviewed by Somer G. Anderson

At a glance — 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.

Why Your Credit Score Matters

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:

Exceptional (800 - 850)
Very good (740 - 799)
Good (670 - 739)
Fair (580 - 669)
Poor (300 - 579)

“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.

A Comparison Table Of The Best Business Loans For Bad Credit

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 2021.

Lender	Best for	Minimum Credit Score	Minimum Time In Business	Loan Amount	Interest Rate
BlueVine Full BlueVine Review	Invoice factoring	530	2 years	Up to $5,000,000	0.25% Weekly
Kiva Full Kiva Review	Crowdfunding	N/A	N/A	Up to $15,000	0% (Repayment period is three years)
Credibly Full Credibly Review	Working capital loans	500+	6 months	Up to $400,000 (But varies on credit)	Factor rate as low as 1.15%
Fundbox Full Fundbox Review	Line of credit	550	3 months of invoicing	$150,000	4.66% for a 12-week term, 8.99% for 24-week term
OnDeck Full OnDeck Review	Term loan	600	6 months	$100,000	Start at 35% annually

Our Recommendations -What Small Business Loans Can You Get With Bad Credit?

The bottom line. Here are our recommendations for the top small business loan types for businesses with bad credit.

BlueVine - Invoice factoring: This is one of the top options for people with bad credit because it offers the most amount of money, up to $5,000,000 - for people with a credit score of 530 and up. Unlike other types of small business loans, invoice factoring is for companies with established business records only.
Kiva: There’s no doubt that Kiva’s loans rank amongst the top. At an interest rate of 0%, and a pay-back-as-you-go repayment period, a small business with Kiva crowdfunding has greater control than a small business with loans anywhere else. Kiva also makes business loans for veterans with bad credit more accessible.
Credibly - Working capital loan: This type of loan has the lowest acceptable credit score at 500. Working capital loans through Credibly can also go up to $400,000.

Best Business Loans for Bad Credit - In-Depth

Let’s now take a closer look at the best business loans for bad credit. Our experts in the field have put together the following overview of the top business loans for businesses with bad credit.

1. BlueVine

BlueVine offers two main sources of funding for businesses: invoice factoring and lines of credit.

Invoice factoring: when a company sells its accounts receivable (money it will earn through its services) to a third party for immediate cash. There are certain return stipulations.
Lines of Credit: offers a company with a direct way to get liquid cash.

BlueVine has also been issuing federally sanctioned, paycheck protection loans (PPP). This has been their main prioritization since the start of the COVID-19 pandemic. BlueVine is one of the fairest and safest loan providers for small businesses with bad credit.

BlueVine Invoice Factoring:

Pros	Cons
Fast loan approval rating Quick turnaround Low approval qualifications	10-15% of revenue is taken on top Service is on pause, in favor of PPP loans Service typically is only available in the US and Canada

BlueVine Credit Line:

Pros	Cons
Fast loan approval rating Low interest rate Direct access to a large amount of money ($250,000)	You need to have a credit rating of above 650 You have to have been in business for a minimum of two years Service is also on paused, in favor of PPP loans

2. Kiva

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.

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.

Pros	Cons
Extremely approachable loans for social causes Interest rate of 0% Loaning process done under an NGO	You can only raise up to $15,000 Only specific types of businesses get full funding

3. Credibly

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.

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.

Credibly Working Capital Loan:

Pros	Cons
Lowest credit score on list (500+) Loan value of up to $400,000 Fast application processing time	2.5% origination fee Daily/weekly payments

Credibly Long-Term Business Loan:

Pros	Cons
Quick approval time Flexible loan usage $250,000 loan value	Interest rate of 9.99% Potential fees 18- to 24-month repayment period

Credibly Line of Credit:

Pros	Cons
Same day funding 560+ personal credit score Interest rates start at 4.8%	Hard to qualify for Smaller borrowing limit

Credibly SBA Loans:

Pros	Cons
80% SBA guarantee, more favorable loan terms Flexible interest rates Longest term lengths (Up to 25 years)	620+ credit score necessary, slightly higher than other types of loans Greater initial cost (A down payment or collateral may be necessary)

4. Fundbox

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.

Fundbox Line of Credit:

Pros	Cons
Low minimum credit score of 550 30-day period to accept the loan Good way to get quick cash	Short term periods of either 12 weeks or 24 weeks Smaller loan amount

Fundbox Term Loan:

Pros	Cons
24-week or 52-week repayment period 30-day period to accept the loan No origination fee	18% interest rate on 52-week repayment

5. OnDeck

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.

OnDeck Term Loan:

Pros	Cons
Multipurpose No origination fee	Repayment of up to 18 months High interest rate of 35% (annual) No services are allowed in Nevada, North Dakota, and South Dakota

OnDeck Line of Credit:

Pros	Cons
12-Month repayment term, which resets after every withdrawal Pay interest on only what you use Instant funding	35.9% annual interest rate

What Is Considered a Bad Credit Score?

Generally speaking, bad credit is any FICO score that falls under 670. A FICO score judges the credit risk of an individual or business. A business’s FICO score is calculated in relation to its previous purchases, debts, and current income. A FICO score is used to assess whether or not a business will be able to pay back a small business loan.

How to Get a Business Loan with Bad Credit

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:

Personal credit score
Years in business
Annual revenue

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.

How to Select a Loan Based on Credit Score and Business Needs

Here are some factors that could contribute to your eligibility for a loan*:

Startups or New businesses - If you have a startup business or have been operating for less than a year, it may be difficult to get a loan, even with good credit. Some financing options are secured personal credit cars, startup business loans bad credit, and business credit cards.
Owners with a credit score less than 550 - You could have trouble attaining certain loan types with a credit score between 500 - 550. If your business is solid, alternative lenders could take factors, other than your credit score, into account.
Business owners with a credit score more than 500 - If you have a credit score between 550-620, you may be eligible for a short-term loan (or a medium-term loan).
Business owners with a credit score more than 600 - If your credit score is over 620, you could be eligible for a medium-term loan. With a score more than 650, you could be able to get a Small Business Administration Loan, as well.
Owners with a credit score more than 700 - If you have a credit score that is more than 700, you are in a solid position to qualify for business loans with most lenders. Such business loans lenders include direct and alternative lenders and Small Business Administration.
Businesses with large invoices that remain unpaid - Certain alternative lenders will let you turn unpaid customer invoices into instant capital. Invoice financing lenders will consider the success of your business and give this more weight than your credit score.
Business with new equipment requirements - If your business needs a new piece of specialized equipment, equipment financing or leasing is a good option.
Extremely small businesses - If you have a very small business you may wish to look at financing options such as secured personal credit cards, business credit cards, and startup financing.

*These are only benchmarks and do not constitute actual approval odds for financing.

The Bottom Line

As we have seen from this article, it is possible to apply for and receive a loan even with bad credit. 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.

Best Business Loans for Bad Credit in 2021