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Best Business Loans for Bad Credit in 2021

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

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.

A Comparison 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

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

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)

OnDeck

Full OnDeck Review 

Term loan

600

6 months

$100,000

Start at 35% annually

Best Business Loans for Bad Credit - In-Depth

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.

1. Credibly - Best for Working Capital Loans

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. 

ProsCons
  • Lowest credit score on list (500+)
  • Loan value of up to $400,000
  • Fast application processing time
  • 2.5% origination fee
  • Daily/weekly payments
  • Interest rate of 9.99%

Features

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: 

  • Merchant cash advance - upper limit is $400,000 and 3- to 18-month terms
  • Working capital loan - upper limit is $400,000 and 6- to 18-month loan terms
  • Business expansion loan- upper limit is $250,000 and 18- or 24-month loan terms
  • Business line of credit - upper limit is $250,000 and differing loan terms

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.

2. Fundbox - Best for Line of Credit

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:

ProsCons
  • 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:

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

Features 

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

3. BlueVine - Best for Invoice Factoring

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

ProsCons
  • Fast loan approval rating
  • Quick turnaround
  • Low approval qualifications
  • Direct access to a large amount of money ($250,000)
  • 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

Features

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. 

Read full BlueVine review

4. Kiva - Best for Crowdfunding

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. 

ProsCons
  • 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

Features  

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.

5. OnDeck - Best for Term loans

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:

ProsCons
  • Multipurpose
  • No origination fee
  • 12-Month repayment term, which resets after every withdrawal
  • Pay interest on only what you use
  • Repayment of up to 18 months
  • High interest rate of 35% (annual)
  • No services are allowed in Nevada, North Dakota, and South Dakota

Features

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.

    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)
    Recommended Reading: Best Business Acquisition Loans in 2021

    What Is Considered a Bad Credit Score? 

    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.

    Recommended Reading: Best Microloans for Small Businesses

    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. 

    Recommended Reading: Best Secured Business Loans 2021


    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 of 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 of 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.

    See Our Additional Guides on Business Loan Types

    The Bottom Line

    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. 

    • 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.