Best Small Business Loans for Bad Credit

PayPal is an online payment system now offering short-term small business loans called LoanBuilder. This loan is also known as a PayPal Business Loan—it’s the same. Lending is through WebBank, a member of the FDIC. Loan terms are a maximum of 52 weeks, and you only need a 580 credit score to qualify.

Your loan application can be completed online or on the phone in five to 10 minutes, and approval is instant. After approval, receive funding of $5,000 to $150,000 directly into your business bank account as soon as the next business day.

Both a blanket lien and a personal guarantee are required when taking out a loan. Automatic weekly repayments come directly out of your business bank account. While you can’t adjust the frequency of repayment, you can specify which day of the week your payments come out. Should a payment fail, there’s a $20 non-sufficient funds (NSF) fee. 

If you make your payments regularly, you won’t pay any fees aside from a one-time borrowing fee, based on a percentage of the total loan amount—as opposed to a traditional APR. This means you won’t save any money by paying off the loan early.

Lendio is a small business lending marketplace launched in 2011 that matches businesses with 75+ different lenders to secure the funding they need. Because Lendio doesn’t originate the loan, you receive multiple offers and can pick the one that best matches your needs.

Line of credit applications take 15 minutes and are a great option for businesses at least six months of age with $50,000 in annual revenue. Business owners must have a credit score of 560 and be willing to wait up to two weeks to receive funding. Loan terms offered are one to two years. 

With a line of credit, you can borrow against it as often as possible, provided you don’t go over your credit limit. Borrow between $1,000 and $500,000 with interest rates of 8% to 24%. Depending on the lender you go with, they may ask for a personal guarantee.

Your repayment amount and frequency depend on the final lender you choose. However, the longer you’ve been in business and the higher your credit score, the lower your payments will be.

Launched in 2006, OnDeck is a publicly traded small business lender that works online and by phone. You only need a minimum credit score of 625 which is less than what many providers allow. Plus, after loan approval, you can receive your funds as soon as the same day and can receive more money after paying down half your loan.

You can borrow anywhere from $5,000 to $250,000 and lines of credit from $6,000 to $100,000. The amount available to borrow depends on your business revenue.  

Repayment terms for term loans are up to 24 months, and 12 months for a line of credit loan. On a term loan, once you’ve repaid half of the loan, you can apply for more money, and you won’t be charged any remaining interest on your existing loan. Unlike most lenders, repayments occur automatically either daily or weekly, depending on the business information you provide to OnDeck.

The minimum APR for both term loans and line of credit loans is 29.9% as of March 2023. Paying off the loan early may result in your remaining interest being waived. However, this prepayment benefit option will mean a higher APR. OnDeck will also take a blanket lien on all business assets and require a personal guarantee.

Rapid Finance offers lending solutions to small and medium-sized businesses. Its site boasts excellent reviews and offers one of the longest business loan terms at 60 months (most lenders are two years or less). Plus, when you apply for a loan, you can often get approval and funding within hours.

Your business must be at least three to six months old to qualify for many of its small business loans. However, other loan types, such as most of its short-term loans, require at least two years in business. A blanket lien is required. 

Rapid Finance advertises daily, weekly, or monthly payments, but the website offers few details beyond that. No interest rates are published online, so it is necessary to reach out to customer service for repayment details.

Credibly is a lender that launched in 2010 and offers one of the lowest minimum credit scores (500) out of all lenders we looked at. Businesses must have monthly revenue of at least $15,000 and be in business for at least six months. You’ll also have higher fees than with other lenders.

Choose from several different types of small business loans:

• Working capital loan
• Business expansion loan
• Business line of credit
• SBA loan
• Merchant cash advance
• Equipment financing
• Invoice factoring

Depending on which Credibly loan product you choose, you can borrow up to $400,000 and have loan terms of up to 24 months.

Credibly charges a 2.5% origination fee in addition to your factor rate. This factor rate starts at 1.15. This means on a $10,000 loan with a factor rate of 1.15, you will pay a $1,500 fee, in addition to the 2.5% origination fee, on a $10,000 loan.