Small Business Small Business
The Best Small Business Loans for Bad Credit
Funding for Borrowers with Less-Than-Perfect Credit
By Kathy Haan
Updated 21st October, 2022
Fact checked by Vikki Velasquez
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If you’re in a bad financial position however, you may still be eligible for an unsecured small business loan. The reason is that your score doesn’t matter in the same way as the overall financial health of your company. A majority of lenders require a Credit Score of $500, at least six months in business, and more than $30,000 in annual revenue.
Small business loan products include:
Cash advance for merchants
Invoice factoring
Line of credit
Working capital
Expanding business
Equipment financing
Small-business administration (SBA) loans
It is possible to pay higher charges and interest rates if you have bad credit as a business owner. When you take out specific loan products, like invoice factoring loan or a merchant cash advance, these loans rely upon future revenue or money already invoiced , but not yet received.
We analyzed 19 small business loan lenders to determine the best options available for people with poor credit. The terms and rates of loans should be reasonable, so they were crucial factors in our evaluations. We also looked at real customer reviews and credit score requirements and loan amounts available.
The Best Small Business Loans for Bad Credit for 2023
Top Overall: OnDeck
Best Short-Term Loans: PayPal
Most Suitable Line of Credit Lendio
Ideal for long-term financing: Rapid Finance
Most effective for high revenue Trustworthy
The best Small Business Loans for People with Bad Credit
Our Top Picks
OnDeck
PayPal
Lendio
Rapid Finance
Credibly
Read More (2)
The Bottom Line
Compare Providers
FAQs
What is a personal guarantee?
What is your credit score? Need for An SBA Loan?
Is it possible to get a Business Loan With Bad Credit?
What Is the Easiest Business loan to get?
Methodology
Best Overall OnDeck
OnDeck
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OnDeck is the top overall small company loan lender for those with bad credit, as it accepts credits of 625 and same-day funding is possible. As long as you’ve been operating for more than an entire year, possess a business bank account, and at minimum $100,000 in annual revenues, you can apply for an loan.
Pros
Minimum credit score of 625
It is possible to fund the same day.
Request more cash after you’ve paid back half of your initial loan
Cons
Very high rates of interest
Requires a daily or weekly payment
It is not possible to lend to businesses located operating in Nevada, North Dakota, South Dakota, and in certain specific industries
It was established in 2006 and OnDeck is an open-market small business lender that operates via phone and online. It’s the top overall small-business lender for those with bad credit because to qualify for a loan, you only need a credit score of 625, which is less than what many lenders will permit. Additionally, once you have received loan being approved, you can get your funds as early as the next business day. You will receive additional funds after paying down half the amount of your loan.
You can borrow anywhere between $5,000 to $250,000 and credit lines that range between $6,000 and $100,000. The amount you can credit is contingent upon your business revenues.
The terms of repayment for term loans can be up to 24 months and 12 months for an unsecured line of credit loan. On a term loan, once you’ve repaid half of the loan then you are able to request more funds and will not be charged any interest that remains on the existing loan. Unlike most lenders, repayments occur on a regular basis, either weekly or daily, depending on the business information you give to OnDeck.
Minimum APRs for short-term loans or lines of credit loans is 29.9 percent at the time of January 2023. Paying off the loan earlier could result in your remaining interest being removed. However, this prepayment benefit choice will result in an increase in the APR. OnDeck also will take the form of a general lien on all assets of the business and will require an individual guarantee.
Best Short-Term loans PayPal
LoanBuilder
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We picked PayPal LoanBuilder as the lender with the most efficient short-term loans due to its loan terms between 13 and 52 weeks. The minimum credit score needed to qualify for the loan is 580 and funding can happen as soon as the next day of business.
Pros
Minimum credit score of 580
The loan terms range from 13 to 52 weeks
Receive funds as soon as possible on the next business day
Cons
Must have business revenue of more than $33,300 annually.
There is no financial gain in paying the loan early, as the entire fee is due upon payoff
Unavailable for startups
PayPal is an internet-based payment system now providing short-term small-business loans that are referred to as LoanBuilder. This loan is also called a PayPal Business Loan, which is the same. Lending is made through WebBank, a member of the FDIC. It is the top short-term small business loan service for those with bad credit because loan terms are up to a maximum of 52 weeks and you require only 580 points to qualify.
The loan application can be completed via the internet or over the phone within five to 10 minutes. Approval is instant. Once approved, you will receive funds from $5,000 to $150,000 directly into your bank account as soon as the next business day.
A blanket lien and a personal guarantee are required for obtaining the loan. Automatic weekly repayments come directly out of your business bank account. Although you aren’t able to alter the amount of time you pay but you can set the days of the week the payment is made. If a payment fails, there’s a $20 not-sufficient fund (NSF) fee.
If you pay your loan on a regular basis, you don’t have to pay any fees aside from one-time fees for borrowing, based on a percentage of the loan amount, as in contrast to an APR traditional. You won’t be able to make any savings when you pay off the loan early.
Best Line of Credit Lendio
Lendio
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If you require flexible financing, you should consider the possibility of a small-business credit line with Lendio. There is no obligation to use all of the funds, and you’ll not be charged for funds you don’t utilize. Many people think of the credit line as security nets – it’s there in case you require it.
Pros
560 minimum credit score
Only pay interest on the funds you use
Application takes just 15 minutes
Cons
The minimum amount is $50,000 in annual income
The funding process can take between one and 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 over 75 different lenders to help them get the money they require. Because Lendio doesn’t originate the loan it gives you numerous offers and are able to choose the one that best matches your requirements. This is the best credit line for small business owners with bad credit because you only require a credit score of 560 and you have no obligation to utilize all of the funds. Additionally, you do not pay any interest on those unused funds.
Line of credit applications can take 15 minutes and are an excellent alternative for companies that are at least six months of age with a revenue of $50,000 per year. Businesses require at least a minimum credit score of 560 and be willing to wait up to two weeks before receiving funding. Loan terms offered are between one and two years.
With a credit line you are able to take out loans against it as frequently as you like, as long as you don’t overdraw your credit limit. You can borrow between $2,000 and $500,000 and pay interest rates of between 8% and 24%. Based upon the loan provider you choose to work with, they may require an individual guarantee.
Your repayment amount and frequency are contingent on the lender you choose. The longer you’ve been in business and the better your score on credit, the less the amount of your repayments will be.
Ideal for long-term financing Rapid Finance
Rapid Finance
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With Rapid Finance, you can get up to $1 million in loans, according to your monthly earnings and loan terms that range from 60 months. The lender will consider the entire performance of your company, not only your personal or business credit score to determine if your company is eligible for funding.
Pros
Loan terms up to 60 months
Looks at 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 company of Quicken Loans and offers lending solutions for small and medium-sized businesses. Its site boasts great reviews and has an industry-leading loan terms at 60-months (most lenders are two years or less). This makes it the best small business loan choice for financing long-term with poor credit. Plus, the moment you make an application for a loan, you can often be approved and funded within days.
To qualify to receive a loan to be eligible for a loan, your company must be between three and six months in age in order to qualify for many of its small business loans. However, other loan types, such as the majority of short-term loans are required to have at least two years of operation. A blanket lien is required.
Rapid Finance advertises daily, monthly or weekly installments, but the website offers little more information than that. The rates for interest are not published online, so it’s necessary to reach out to the customer service department for information on repayments.
The best option for high-revenue credibility
Credibly
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To be eligible for a small-business loan with credibility, you need to have an income of at least $15,000 per month. This is a fantastic option for those who earn. The process is fast with a minimum credit score of 500.
Pros
Minimum credit score of 500
Business owners who are at least six months old
Offers up to $400,000 and funds as soon as the same day
Cons
It requires a minimum of $15,000 per month.
Daily or weekly repayment
Credibly is a loan provider that launched in 2010 and provides some of the best minimum scores for credit (500) out of all the lenders we reviewed. The reason they’re able to achieve this is why it is the most suitable choice for small companies with high revenue–businesses must have minimum monthly revenues of $15,000 and be in business for at least six months. You’ll also have higher fees that 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
Based on the you choose to use the Credibly loan product you choose You can take out loans up to $400,000 and have loan terms of up to 24 months.
Creditibly will charge a 2.5 percentage origination fee, in addition to your factor rate. The factor rate begins at 1.15. That means that on a 10,000 loan that has a factor of 1.15 you’ll have to be charged $1,500 along with the 2.5 percent origination cost, on the $10,000 loan.
The Bottom Line
Small business loans allow you to expand your operations, cover payroll as well as pay for equipment and manage cash flow. If you’re a poor creditor getting a loan can be difficult, but there are plenty of loan options for those with credit scores as lower as 500. Some lenders don’t even have a minimum score, and instead, focus on overall business health.
We suggest OnDeck for small-business loan requirements if you have poor credit since it provides immediate funding for those with a credit score of 625. Additionally, it rewards loyalty. After paying back half your loan you are eligible to request additional money, and you will not be charged any remaining interest on the original loan.
Compare Providers
Small-Business Loan Wins For the most important Benefit
OnDeck
Best Overall Same-day funding and a minimum credit score 625
PayPal
Best Short-Term Loans terms ranging from 13 to 52 weeks
Lendio
Best Line of Credit Only pay interest on the funds you use without obligation to make use of it
Rapid Finance
Best for Long-Term FinancingUp to 60 months and fast funding
Credibly
The best option for high revenueCredit score minimum of 500 provided you have $15,000 in monthly income
Frequently Asked Questions
What Is a Personal Guarantee?
A personal guarantee is when the business owner assumes the business’s debt in the event the business fails to pay it. This can protect lenders in case of default, and makes it easier for businesses to qualify for an loan when they might not be able to without a personal guarantee.
What is your credit score? need to get An SBA Loan?
It is important to note that the Small Business Association (SBA) does not have the minimum credit score required to obtain an SBA loan. But, SBA loans can be obtained from lenders who may have minimum score requirements. Typically, this minimum is about 620.1 But the higher your score higher, the more likely to be approved.
Is It Possible to Get a Business Loan Even With Poor Credit?
Yes, it’s possible to get a business loan with poor credit. Certain lenders do not require the minimum credit score, and instead take into consideration their overall financial health and the business instead. However, you can expect to pay more fees or have a higher APR if you have bad credit.
What is the most simple business Loan you can get?
The most straightforward business loan to get can be one with a security. This means that the loan is backed by collateral, and the lender will receive the collateral in case the business owner fails to pay the loan. The collateral pledged usually comprises inventory, property equipment, equipment, savings accounts or blanket liens. It also includes personal guarantees.
How We Chose the most effective Small Business Loans to Help People with Bad Credit
We looked at 19 of the most effective small company loans available and we narrowed it down to the top six choices for those with bad credit with a focus on various characteristics and aspects. We looked at rates, credit score requirements, loan amounts, and repayment conditions. The reviews of customer service sales, customer service, and user-friendliness weighed heavily into our decision–obtaining the smallest business loan is supposed to be a pleasurable, stress-free experience for owners of businesses.
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