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Small Business Small Business
Best Small Business Loans for Bad Credit
Loans for Borrowers with less-than-perfect Credit
By Kathy Haan
Updated 21 October 2022
Facts checked by Vikki Velasquez
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When you have bad credit however, you may still be eligible for an unsecured small business loan. This is because your credit score isn’t as important to the overall financial health of your business. A majority of lenders require a rating of 500 points, at least six months in business plus more than $30,000 of 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 are not able to credit the owner of your business. When you apply for certain loan products, such as invoice factoring loan or a merchant cash advance such loans depend in the future of sales, or on funds already invoiced but not yet received.
We looked at 19 different small-business loan lenders to identify the best options available for people with poor credit. The terms and rates of loans should be affordable, and these were key factors in our assessments. We also examined actual customer reviews and credit score requirements and loan amounts available.
The Most Effective Small Business Loans for People with Bad Credit for 2023
Best Overall: OnDeck
Best Short-Term Loans: PayPal
Best Line of Credit: Lendio
Ideal for long-term financing: Rapid Finance
The best option for high-revenue: Credibly
The Best Small Business Loans for People with Bad Credit
Our Top Picks
OnDeck
PayPal
Lendio
Rapid Finance
Credibly
See More (2)
The Bottom Line
Compare Providers
FAQs
What is a personal guarantee?
What Credit Score Do You need to get the SBA Loan?
Can I Get a Business Loan With Bad Credit?
What is the most simple business loan to get?
Methodology
Best Overall OnDeck
OnDeck
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OnDeck is the top all-around small business loan lender for people with poor credit because it accepts minimum credit scores of 625 and even same-day financing is available. So long as you’ve been running your business for more than a year, have an account with a bank for business, and at minimum $100,000 in annual revenues and you’re eligible for a loan.
Pros
Minimum credit score of 625
It is possible to fund the same day.
Apply for more money when you’ve repaid half of your original loan
Cons
Very high interest rates
Requires daily or weekly repayment
It is not possible to lend to businesses located operating in Nevada, North Dakota, South Dakota, and in certain sectors.
Launched in 2006, OnDeck is an open-market small business lender that is accessible via phone and online. This is the best overall small business lender for bad credit as to be able to get an loan it is necessary to have an average credit score of 625 which is less than what many lenders will permit. In addition, following loan approval, you can get your money as fast as the next business day. You you can get more after you have paid off the half of the amount of your loan.
You can borrow anywhere between $5,000 to $250,000 and credit lines that range from $6,000 to $100,000. The amount you can borrow depends on your business revenue.
The terms of repayment for term loans are as long as 24 months, or 12 months for the line of credit loan. On terms of a loan after you’ve paid half of the loan then you are able to request more funds and will not be charged any remaining interest on the existing loan. Unlike most lenders, repayments occur automatically either daily or weekly depending on the company details you supply to OnDeck.
The minimum APR for both term loans as well as lines of credit loans is 29.9 percent at the time of January 2023. Paying off the loan early could result in your remaining interest being waived. However, this prepayment benefit choice will result in a higher APR. OnDeck will also take a blanket lien on all assets of the business and requires an individual guarantee.
Best Short-Term loans PayPal
LoanBuilder
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We chose PayPal LoanBuilder as the lender with the most efficient short-term loans because it provides loan terms between 13 and 52 weeks. Your minimum credit score to be eligible for the loan is 580, and the loan can be funded as early as the next business day.
Pros
580 minimum credit score
Terms of loans ranging from 13 to 52 weeks
Get your money as quickly as possible on the next business day
Cons
Must have business revenue of at least $33,300 per year.
There is no financial gain in paying the loan off early as the entire fee is due at payoff
Unavailable for startups
PayPal can be described as an online payments system now offering short-term small business loans known as LoanBuilder. The loan is also called a Business Loan–it’s identical. Lending is made through WebBank and is which is a member of the FDIC. WebBank is the most convenient short-term small-business loan service for those with bad credit as loan terms can be a maximum of 52 weeks and you only need 580 points of credit to qualify.
Your loan application can be completed either online or by phone within five to 10 minutes. The approval is quick. Once you’ve been approved, you can receive funds of $5,000 to $150,000 directly into your company bank account on the next working day.
A blanket lien and a personal guarantee are required for obtaining a loan. The automatic weekly repayments are taken out of your company bank account. While you can’t adjust the amount of time you pay, you can specify which days of the week the payments are made. If a payment fails, there’s a $20 not-sufficient fund (NSF) fee.
If you pay your loan frequently, you will not have to have to pay any charges other than one-time fees for borrowing, which is based on an amount of the loan amount, as in contrast to an APR traditional. That means that you don’t make any savings when you pay off the loan in advance.
Best Line of Credit Lendio
Lendio
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If you’re in need of flexible financing, think about an unsecured line of credit with Lendio. There is no obligation to use all of the funds, and you won’t pay for the funds you don’t use. A lot of people view credit lines as a safety net–it’s there if you need it.
Pros
560 minimum credit score
You must pay the interest only on amount you have used
Application takes just 15 minutes
Cons
The minimum amount is $50,000 in revenue per year
Funding takes one to two weeks
A loan term of one to two years
Lendio is a small business lending marketplace launched in the year 2011 that connects businesses with 75+ different lenders to secure the funding they need. Because Lendio doesn’t create the loan it gives you multiple offers and can pick the one that is most suitable to your needs. This is the ideal option for small-sized business owners with low credit scores because you only require a credit score of 560 and you have no obligation to utilize all of your money. Additionally, you do not pay any interest for the funds that are not used.
Line of credit applications take 15 minutes and are a great option for businesses at least six months of age with a revenue of $50,000 per year. The business owner must have at least a credit score of 560 and be willing to wait up to two weeks before they can receive funds. The loan terms are from one to two years.
If you have a credit line you are able to borrow against it for as long as possible provided you don’t overdraw your credit limit. The loan ranges from $1,000 to $500,000 with interest rates of between 8% and 24 percent. Depending on the lender you sign with, they may request an individual guarantee.
The amount of your repayment and the frequency will depend on the lender you choose. The longer you’ve been operating and the better you credit rating, the less the amount of your repayments will be.
The best option for long-term financing. Rapid Finance
Rapid Finance
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Through Rapid Finance, you can take out loans of up to $1 million, according to your monthly earnings and loan terms that range from 60 months. The lender will consider the overall performance of your company, not just your personal or business credit score–when determining if your business will qualify for financing.
Pros
Loan terms up to 60 months
Assesses overall business health and not just a credit score
Funds available within hours after approval
Cons
Repayment details not available online
Interest rates not available on the internet.
Rapid Finance is a sister business to Quicken Loans and offers lending solutions to small and medium-sized businesses. The site has outstanding reviews and boasts an industry-leading loan terms of 60 months (most lenders have two years or less). This makes it the best small business loan option for long-term financing even with bad credit. Additionally once you’ve applied for the loan typically, you will get approval and funding within minutes.
To be eligible for to get a loan to be eligible for a loan, your company must be between three and six months in age for the majority of its small-business loans. But, other loan types, like most of its short-term loans, require the minimum of two years of business. A blanket lien is required.
Rapid Finance advertises daily, weekly, or monthly payments however, the site provides little more information than that. The rates for interest are not available online, which is why it is essential to contact the customer service department for information on repayments.
Most effective for high revenue credibility
Credibly
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To be eligible for a small business loan through credibility, you need to have revenue of at least $15,000 per month. This makes it an ideal choice for those who earn. Funding is quick, with a minimum credit score of 500.
Pros
A credit score minimum of 500 is required.
Businesses that are at least six months old
Offerings of up to $400,000 and the funds are available the same day
Cons
The minimum amount of revenue required is $15,000 per month
Weekly or daily repayment
Credibly is a lender which was founded in the year 2010 and has one of the lowest minimum credit scores (500) out of all the lenders we reviewed. The reason they’re able to achieve this is why it’s the best choice for small companies with significant revenue. Businesses must have a monthly revenue of at least $15,000 and operate for at least six months. There are also higher costs as opposed to other lenders.
Select from a variety of different kinds of small-business loans:
Working capital loan
Business expansion loan
Line of credit for businesses
SBA loan
Cash advance for merchants
Equipment financing
Invoice factoring
The credibly loan product you choose, you can borrow up to $400,000 and have loan terms that extend 24-months.
The company charges you a 2.5 percent origination fee on top of your factor rate. This factor rate starts at 1.15. This means on the 10,000 loan with a factor rate of 1.15 you’ll have to have to pay $1,500 in fees plus the 2.5% origination fee, for an $10,000 loan.
The Bottom Line
Small-scale business loans help you expand operations and cover payroll costs, pay for supplies, and manage cash flow. If you’re not a credit-worthy business, finding a lender isn’t easy, however there are plenty of loan options available with credit scores as low as 500. Some lenders don’t require a minimum score, and instead, they look at the overall health of your business.
We suggest OnDeck for your small business loan requirements if you have bad credit because it offers same-day funding with a minimum credit score of 625. It also rewards loyalty–after repaying half of your loan you can apply for additional funds and won’t be charged fees on your initial loan.
Compare Providers
Small Business Loan is a winner The Most Important Benefit
OnDeck
Best Overall Same-day funding and minimum credit score of 625
PayPal
Best Short-Term Loans Loan terms ranging from 13 to 52 weeks
Lendio
Best Line of Credit Pay interest only on the funds you use but you are not required to make use of it
Rapid Finance
Ideal for long-term financingLoan terms up to 60 months, and quick financing
Credibly
Best for High RevenueCredit score minimum of 500 if you make $15,000 in monthly income
Frequently Answered Questions
What is a personal guarantee?
A personal guarantee means that the business owner is responsible for the business obligation in the event that the business fails to pay it. This protects the lender in the event of default, and makes it easier for businesses to qualify for the loan even if they would not have one without personal guarantees.
What is your credit score? require for an SBA Loan?
The Small Business Association (SBA) does not have the minimum credit score required to obtain the SBA loan. It is true that SBA loans will be provided by lenders who may have minimum credit score requirements. Typically, this minimum is about 620.1 However, the better your score, the more likely you will be to get approval.
Can I Get a Business Loan Even With Poor Credit?
It is possible to get an enterprise loan even if you have bad credit. Some lenders don’t have the minimum credit score, and instead take into consideration their overall financial health and the business instead. You can however expect to pay higher fees or have a higher interest rate when you have poor credit.
What is the most simple business loan to get?
The easiest business loan to get is one that is secured. This means that the loan is secured by collateral, and the lender gets the collateral in case the business owner fails to pay the loan. The collateral pledged usually includes inventory, property equipment, savings accounts, blanket liens, and personal guarantee.
How Do We Choose the Best Small Business Loans for Bad Credit
We looked at 19 of the most effective small business loans available and we narrowed it down to the top six choices for those with bad credit with a focus on various features and considerations. We considered the rates, requirements for credit scores, loan amounts, and repayment conditions. The reviews of customer service, sales, and the ease of use factored heavily into our choice of getting a small business loan is supposed to be a pleasurable, stress-free experience for business owners.
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