Compare the Best Business Loans for Bad Credit in 2023
Running a company takes money—sometimes a lot of it. Even if you started your business with little money out-of-pocket, increasing revenue and expanding might require a business loan. You can buy equipment, supplies, and perhaps invest in better marketing.
Yet, some people give up on the idea of growth because they don’t have capital.
With so many resources available, though, there are various ways to get your hands on funding.
But, what if you have bad credit? Can you still get a business loan?
The good news:
Bad credit doesn’t have to stop getting a loan.
Sure, some lenders might not approve your application due to a low credit score—but some will not dismiss your loan request immediately.
Best Business Loans for Bad Credit
Here’s a look at six of the best business loans for bad credit in 2020.
Bad Credit Business Loans Compared
|Minimum credit score
|Be in business for 1 year and have revenue of $50,000 per year
|Up to $250,000
|3 months of financial records and have revenue of $50,000 per year
|$1,000 to $100,000
|24 months of business bank statements
|Up to $250,000
|Be in business for 6 months with minimum sales of $100,000 per year
|$5,000 to $5,000,000
|Be in business for 1 year with an active business bank account and have revenue of $100,000 per year
|$5,000 to $500,000
|Be in business for 2 years
|$25,000 to $500,00
Investing in your business is one of the best ways to increase growth and generate more revenue.
If you don’t have the available cash, applying for a business loan with Kabbage can provide the resources you need for inventory, equipment, or to improve cash flow and cover payroll on a short-term basis.
You might qualify for business funds up to $250,000. And the best part is that you don’t need perfect credit to get approved.
Although there’s a credit check, you only need a minimum credit score of 560. This is because Kabbage puts the focus on business revenue when determining eligibility and affordability.
To be eligible:
You must be in business for at least one year, and you must have business revenue of $50,000 per year.
Kabbage doesn’t charge a prepayment penalty, so you’re free to pay off your loan balance at any time.
Fundbox is another way to get funds for your business with bad credit. You can apply and get a credit decision within minutes, and then use the money to invest back into your company and grow faster.
There’s a credit check and qualifying for funds does require a personal credit score of at least 500.
You must also provide at least three months of business financial records and your minimum revenue must be $50,000 per year.
Once approved, you’re able to access funds by the next business day. Pay back what you borrow over 12 to 24 weeks. Loan amounts range from $1,000 to $100,000 and there’s no prepayment penalty.
Apply for a business loan through QuarterSpot and get up to $250,000 today. See if you qualify in minutes, and if so, get funds by the next business day. This lender also offers low, fixed payments.
Getting started is easy. Apply for the loan, compare offers, and choose the one that works for you.
The loan does require a personal guarantee, so there’s a credit check. This is how the lender gauges your risk level, which also affects your interest rate. The company will request up to 24 months of business bank statements to determine the strength of your company.
You can get a loan with a score as low as 550 and there’s no prepayment penalty. You can select a loan term between six and 18 months, and then pay it off early at anytime.
BlueVine might be a solution if you need a sizable business loan. This lender offers loans ranging from $5,000 to $5 million, depending on whether you need a term loan or an advance to pay outstanding invoices.
The minimum requirement varies depending on the type of funding.
To qualify for a term loan, you’ll need a minimum credit score of 600 and you must be in business for at least six months with minimum sales of $100,000 per year.
To qualify for invoice financing, though, you must be in business for at least three months, have a personal credit score of 530. Also, you’ll provide proof of at least $10,000 in monthly revenue. There’s no prepayment penalty.
Apply today to see if you’re eligible to get a term loan ranging from $5,000 to $500,000.
You can qualify after one year in business. You must have a minimum credit score of 600, annual business revenue of $100,000, as well as an active business bank account.
OnDeck also offer same-day funding, so if you apply today you might receive funds by the end of the day. Choose a flexible repayment term ranging from three to 36 months.
After applying, you’ll receive several offers which you can review, compare, and then choose the one that best fits your needs.
6. Funding Circle
This affordable business loan allows you to borrow between $25,000 and $500,000, which you can repay over a period of six months to five years. Funds are great for growing your business, purchasing new equipment, and even bringing on new staff.
To qualify, you need a minimum credit score between 620 and 660.
The company’s website doesn’t provide information about minimum revenue, but loan approval does require a minimum of two years in history.
Common Costs Associated With a Business Loan
Before applying for a business loan, make sure that you’re aware of common costs associated with loans.
Of course, you can expect to pay interest, with your credit history influencing your rate.
Typically, the higher your credit score, the lower your interest rate. This can lower your monthly payments and help you save money in interest.
Keep in mind that some business loans also have loan fees.
These can include set up fees, servicing fee, and loan origination fees. When shopping for a business loan (or any loan), make sure you compare fees among different lenders. This ensure you’re getting a good, affordable deal.
The best business loan lenders will not charge fees or charge limited fees.
Be mindful, too, that some loans also have prepayment penalties. And if so, you’re charged a fee if you pay off the loan early. Look specifically for loans that don’t charge this fee.
Fortunately, none of the lenders on this list charge a prepayment penalty.
Alternatives to Getting a Business Loan
Even though a business loan can provide funds to help grow your company and improve cash flow, this isn’t the only option for getting your hands on capital.
Business credit card
Some business loans have minimum loan amount requirements. So, a loan might not be the right fit if you need a small amount of money.
In this case, you can look into getting a business credit card.
A business credit card is an excellent way to separate personal expenses from business expenses, helping with record keeping.
Secured business credit card
If you have bad credit, though, your best bet is to apply for a secured business credit card.
These cards require an upfront security deposit, which serves as collateral. The creditor will deposit these funds into a savings account, where it’ll remain until you close your secured business credit account or convert it to an unsecured account, if allowed by the bank.
Secured business credit cards do have higher interest rates, and some also have upfront fees.
Even so, this is an affordable option to jumpstart business credit. Plus, these credit cards are a lot easier to get with bad credit than unsecured business credit cards.
Tips to Build Business Credit
One benefit of applying for a business loan or a business credit card is that they help build a business credit profile.
This way, you can work toward keeping your business credit entirely separate from your personal credit.
In the beginning, though, building business credit often requires having a personal credit score. Until you establish business credit, you’ll likely need to provide a personal guarantee for business financing.
But as your business credit profile improves, eventually you’ll be able to apply for a loan or line of credit in your business name only.
To improve your business credit profile, you can try for a secured business loan or a secured business credit card with lenders that report your activity to the business credit bureaus (Experian Business and Dun and Bradstreet).
The more positive activity that appears on these credit reports, the better.
Make on-time payments
To build your credit history, it is also important to make timely payments every single month.
And if using a credit card, only charge what you can afford and pay off the credit card in full every month.
Operating a business can be expensive.
Even if you start your business with little money, you may eventually need a lump sum of cash to take your company to the next level. In this case, a business loan can get you where you need to be—even if you have a low credit score.
The key is knowing which lenders accommodate people with your credit profile and then applying for financing with these companies.