When you have bad credit, you can still get a small business loan. This is because your credit score doesn’t matter as much as the overall financial health of your business. Most lenders require a minimum credit score of 500, at least six months in business, and $40,000 in annual revenue.
Small business loan products include:
- Merchant cash advance
- Invoice factoring
- Line of credit
- Working capital
- Business expansion
- Equipment financing
- Small business administration (SBA) loans
You can expect to pay higher fees and interest rates when you have bad credit as a business owner. When you take out certain loan products, such as an invoice factoring loan or a merchant cash advance, these loans rely on future sales or money already invoiced but not yet received.
We reviewed 19 different small business loan lenders to determine the best options available for those with bad credit. Loan terms and rates should be reasonable, so these were important considerations in our assessments. We also looked at real customer reviews, credit score requirements, and loan amounts available.
Best Overall : OnDeck
OnDeck is the best overall small business loan lender for bad credit because it accepts minimum credit scores of 600, and same-day funding is possible. As long as you’ve been in business for over a year, have a business bank account, and at least $100,000 in annual revenue, you can apply for a loan.
600 minimum credit score
Same-day funding is possible
Apply for more money when you’ve paid back half of your original loan
Repaying the loan early will not save money
Requires daily or weekly repayment
Cannot lend to businesses in Nevada, North Dakota, and in certain industries
Launched in 2006, OnDeck is a publicly traded small business lender that works online and by phone. This is the best overall small business lender for bad credit because to qualify for a loan, you only need a minimum credit score of 600, 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 three to 36 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 on term loans is 11.89%, and 10.99% for line of credit loans. The origination fee is built into the APR, and 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.
Best Short-Term Loans : PayPal
We chose PayPal LoanBuilder as the lender with the best short-term loans because it offers loan terms between 13 and 52 weeks. Your minimum credit score to receive a loan is 550, and funding can happen as soon as the next business day.
550 minimum credit score
Loan terms between 13 and 52 weeks
Receive funds as soon as the next business day
Must have business revenue of $42,000 or more per year
No financial benefit for paying the loan off early as the full fee is due at payoff
Unavailable for startups
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 its subsidiary, Swift Financial, LLC. This is the best short-term small business loan provider for bad credit because loan terms are a maximum of 52 weeks, and you only need a 550 credit score to qualify.
Your loan application can be done online or on the phone in five to 10 minutes, and approval is instant. After approval, receive funding of $5,000 to $500,000 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 of 2.9% to 18.72% 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.
Best Line of Credit : Lendio
If you need flexible financing, consider a small business line of credit with Lendio. You’re not obligated to use all of the funds, and you won’t pay for the funds you don’t use. Many people consider a line of credit like a safety net—it’s there if you need it.
560 minimum credit score
Only pay interest on the funds you use
Application takes just 15 minutes
Must have $50,000 or more in annual revenue
Funding takes one to two weeks
Loan terms of only one to two years
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. This is the best line of credit option for small business owners with bad credit because you only need a 560 credit score and you have no obligation to use all of your funds. Plus, you pay nothing on those unused funds.
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.
Best for Invoice Factoring : BlueVine
BlueVine offers advances on your small business invoices. Automatically sync invoices sent from your accounting software and receive 85% to 90% of your invoice upfront, and the balance of the invoice once it’s paid—minus BlueVine’s fees.
530 minimum credit score
As sales grow, your credit limit grows
Funds in as little as 24 hours
Only available if your business is business-to-business (B2B)
Invoices must be higher than $500
Some medical and healthcare industries cannot use BlueVine because it’s not HIPAA compliant
When your business operates using invoices, bottlenecks in cash flow are inevitable. Rent might be due today, but your client’s invoice is due in 60 days. BlueVine is a bank and lender offering several products for small businesses, one of which is called invoice factoring, which allows you to receive money now for your outstanding invoices. BlueVine is the best invoice factoring lender for bad credit because the minimum credit score required is 530, far lower than most lenders because it uses your client’s invoice payments to cover your loan payments.
Provided you’ve been in business for more than three months, have a credit score of at least 530, and $10,000 in monthly revenue, you can apply for invoice factoring with BlueVine. When your customer pays by the invoice due date, you don’t have any recurring payments because fees come right out of the invoice paid. If you don’t have accounting software that sends invoices, you can simply upload the invoice to your dashboard.
Your credit line depends on your credit score and business health, and you can request advances on as many invoices as often as you want, provided you don’t go over that credit line. Credit lines over $250,000 may require additional paperwork at the time of the application.
In invoice factoring, the fee charged is called a discount rate. BlueVine’s discount rate is .25% to 1.7% per week. There aren’t any other fees unless the customer is late paying or you wire funds. The bank wire fee is $15, although ACH is free. If your customer is more than two weeks late paying, the late fee is 2% to 3% of the amount due, with a daily recurring fee of 0.2% to 0.3% until paid in full.
Best for Long-Term Financing : Rapid Finance
With Rapid Finance, you can borrow up to $1 million, depending on your monthly revenue, and have loan terms up to 60 months. This lender will look at the entire health of your business—not just your personal or business credit score—when determining if your business will qualify for funding.
Loan terms up to 60 months
Looks at overall business health and not just a credit score
Funds available within hours after approval
Some loans require daily or weekly repayments
Monthly fee instead of an APR
Does not work with businesses in New Jersey, Rhode Island, Montana, Vermont, South Dakota, or Nevada; nor does it work with sole proprietorships in Pennsylvania or Oklahoma
Rapid Finance is a sister company to Quicken Loans and offers lending solutions to small and medium-sized businesses. It has some of the best reviews of all the lenders we considered, requires a minimum credit score of 500, and offers one of the longest business loan terms at 60 months (most lenders are two years or less). These reasons make it the best small business loan option for long-term financing with bad credit. Plus, when you apply for a loan, you can often get approval and funding within hours.
To qualify for a loan, your business must be at least three to six months old 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.
Payments automatically come out of your business bank account daily, weekly, or monthly. Instead of an APR, you pay a monthly fee of 9% to 31% of the amount borrowed. Plus, pay an origination fee of 0% to 2.5% depending on the type of loan product.
There is no minimum credit score, although your monthly fee will be lower if you have a higher score. If your loan application is denied due to your score, you can reapply in six months. If it’s denied for any other reason, you can reapply in 30 days.
Best for High Revenue : Credibly
To qualify for a small business loan with Credibly, you must have revenue of at least $15,000 per month, which makes it a great option if you have revenue. Funding is quick, and the minimum credit score is 500.
500 minimum credit score
Available to businesses at least six months old
Offers up to $400,000 and funds as soon as the same day
Requires revenue of at least $15,000 per month
Daily or weekly repayment
APR as high as 45%
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. The reason they can do this is why it makes it the best option for small businesses with high revenue—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
- SBA PPP loans
Depending on which Credibly loan product you choose, you can borrow up to $400,000 and have loan terms up to 24 months. They do offer up to $5 million for business expansion loans just for chiropractors.
Credibly charges a 2.5% origination fee in addition to your factor rate. This factor rate starts at 1.15 and goes up to 1.45. This means on a $10,000 loan with a factor rate of 1.15, you will pay a $1,500 fee. If your factor rate is 1.45, you’re paying a $4,500 fee, in addition to the 2.5% origination fee, on a $10,000 loan.
Small business loans help you expand operations, cover payroll, pay for supplies, and manage cash flow. When you have poor credit, finding a lender can be difficult, but there are many loan options available with credit scores as low as 500. Some lenders don’t even have a minimum score, and instead, look at overall business health.
We recommend OnDeck for your small business loan needs if you have bad credit because it offers same-day funding with a minimum credit score of 600. It also rewards loyalty—after paying back half your loan you can apply for more money and you won’t be charged any remaining interest on your original loan.
|Small Business Loan||Wins For||Key Benefit|
|OnDeck||Best Overall||Same-day funding and minimum credit score of 600|
|PayPal||Best Short-Term Loans||Loan terms between 13 and 52 weeks|
|Lendio||Best Line of Credit||Pay interest only on the funds you use with no obligation to use it|
|BlueVine||Best for Invoice Factoring||Receive funding in 24 hours with a low credit score and a short time in business|
|Rapid Finance||Best for Long-Term Financing||Loan terms up to 60 months and fast funding|
|Credibly||Best for High Revenue||Minimum credit score of 500 provided you have $15,000 in monthly revenue|
Frequently Asked Questions
What Is a Personal Guarantee?
A personal guarantee means that the business owner assumes the business debt in the event the business is unable to repay it. This helps protect the lender in the event of default, and also makes it easier for a business to qualify for a loan when they might not have without a personal guarantee.
What Credit Score Do You Need for an SBA Loan?
The Small Business Association (SBA) does not specify a minimum credit score required to secure an SBA loan. However, SBA loans are provided by lenders who may have minimum score requirements. Typically, this minimum is 620 to 640. However, the higher your score, the more likely you are to receive approval.
Is It Possible to Get a Business Loan With Bad Credit?
Yes, it’s possible to get a business loan with bad credit. Some lenders don’t have a minimum credit score and look at the overall health of the business instead. However, you can expect to pay higher fees or have a higher APR if you have bad credit.
What Is the Easiest Business Loan to Get?
The easier business loan to get is one that is secured. This means the loan is backed by collateral, and the lender gets that collateral if the business owner defaults on the loan. The collateral pledged usually includes property, inventory, equipment, savings accounts, blanket liens, and personal guarantees.
How We Chose the Best Small Business Loans for Bad Credit
We looked at 19 of the best small business loans available and narrowed it down to the best six options for bad credit based on several features and considerations. We considered rates, credit score requirements, loan amounts, and repayment terms. Reviews of customer service, sales, and ease of use weighed heavily into our decision—obtaining a small business loan should be a pleasant, stress-free experience for business owners.