Best Small Business Loans for Bad Credit
Starting or growing a small business can be challenging, especially when your credit score isn't ideal. While bad credit—typically defined as a FICO score below 580—can make traditional financing options like bank loans nearly impossible, many alternative lenders offer viable solutions tailored for entrepreneurs with less-than-perfect credit. These lenders consider other factors such as cash flow, time in business, and revenue, offering hope and opportunity where traditional banking systems fall short.
In this guide, we’ll explore the best small business loans for bad credit, what to expect from them, and how to choose the right one for your needs.
Understanding Bad Credit and Its Impact
Bad credit generally refers to a low personal or business credit score due to past financial missteps like missed payments, defaults, or high credit utilization. Lenders use these scores to assess risk, so a low score can signal a red flag. However, many modern lenders look beyond credit scores to assess your business’s viability. They might evaluate:
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Monthly revenue
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Business bank account history
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Years in operation
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Customer base and payment processing data
This opens doors for businesses with low credit but strong operations.
Top Lenders for Bad Credit Business Loans
Here are some of the best lenders and loan types tailored to business owners with bad credit:
1. Lendio – Best for Comparing Options
Minimum Credit Score: 500
Loan Types: Term loans, merchant cash advances, lines of credit, SBA loans
Funding Time: As little as 24 hours
Lendio is a lending marketplace that allows small business owners to compare multiple loan options through one application. Its platform connects you with over 75 lenders, offering flexibility even if your credit isn’t great. Because of the variety of partners, it's easier to find a lender that considers other factors like cash flow and business performance.
Pros:
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One application, multiple offers
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Quick funding
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Wide range of loan types
Cons:
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May receive offers with high interest rates
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Some lenders have stricter terms
2. Bluevine – Best for Business Lines of Credit
Minimum Credit Score: 625
Loan Type: Business line of credit
Funding Time: Within 24 hours
Bluevine provides a revolving line of credit up to $250,000. While the minimum credit score requirement is slightly higher, they place a strong emphasis on monthly revenue and business history. Bluevine is ideal if you have consistent cash flow but a flawed credit history.
Pros:
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Flexible funding
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Fast approval and access to capital
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Only pay interest on the funds you use
Cons:
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May not be suitable for startups
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Requires strong business performance
3. Fundbox – Best for Fast Approvals
Minimum Credit Score: 600
Loan Type: Line of credit
Funding Time: As little as 24 hours
Fundbox offers short-term lines of credit and is known for a quick, automated approval process. It’s ideal for businesses needing fast cash and who have steady revenue and at least 6 months of operating history.
Pros:
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No paperwork-heavy process
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Transparent pricing
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Easy online application
Cons:
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Short repayment terms
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Weekly repayments may be burdensome
4. Credibly – Best for High-Risk Borrowers
Minimum Credit Score: 500
Loan Types: Working capital loans, merchant cash advances
Funding Time: 24–48 hours
Credibly specializes in working capital loans for businesses with low credit scores and is willing to work with startups and companies in high-risk industries. They evaluate revenue and cash flow more heavily than credit history.
Pros:
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Low credit score requirements
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Customized loan products
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Fast funding
Cons:
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Higher interest rates
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Fees can be complex
5. OnDeck – Best for Repeat Borrowers
Minimum Credit Score: 625
Loan Types: Term loans, lines of credit
Funding Time: Same-day funding possible
OnDeck is known for rewarding returning borrowers with better rates and terms, making it a solid option if you plan to borrow more than once. While their credit score requirements are higher than others on this list, they can still work with imperfect credit if the business has strong financials.
Pros:
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Loyalty benefits for repeat borrowers
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Fast funding
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Transparent fees and terms
Cons:
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Daily or weekly repayments
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Higher starting interest rates
Alternatives to Traditional Loans
If you’re struggling to qualify for a business loan due to credit challenges, consider these alternatives:
Merchant Cash Advance (MCA)
An MCA provides a lump sum in exchange for a percentage of future credit card sales. It's easy to qualify for but can be expensive.
Invoice Financing
Great for B2B businesses, this lets you borrow against outstanding invoices. Your credit score matters less than your client’s ability to pay.
Microloans
Organizations like Kiva or Accion offer microloans (under $50,000) to underserved entrepreneurs. They may be more flexible with credit.
Business Credit Cards
While not technically loans, business credit cards can help with small expenses and may be easier to get, even with bad credit.
How to Improve Your Chances of Approval
While lenders are increasingly flexible, you can boost your odds of approval by:
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Maintaining steady revenue: Show consistent deposits and low overdraft activity.
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Operating for at least 6 months: The longer your track record, the better.
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Keeping separate business and personal finances: Helps lenders assess the health of your company more clearly.
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Offering collateral: For asset-based loans, having equipment or inventory helps offset credit risk.
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Preparing a strong business plan: Demonstrates your seriousness and path to profitability.
Final Thoughts
Bad credit doesn’t have to stop you from accessing the funding you need to grow your small business. Today’s financial landscape offers a range of flexible, fast, and customized options to suit entrepreneurs at all stages and credit levels. From online lenders like Lendio and Fundbox to creative financing options like invoice factoring or merchant cash advances, there are opportunities if you know where to look.
Just be cautious: many bad credit business loans come with higher interest rates and fees. Always read the fine print, compare offers, and prioritize improving your credit over time so you can qualify for more favorable terms in the future.