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Best Small Business Loans for People with Bad Credit

Financing for Borrowers with Less-Than-Perfect Credit

By Kathy Haan

Updated October 21, 2022

Facts verified by Vikki Velasquez

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When you have bad credit, you can still get a small-business loan. It’s because the credit score isn’t as important in the same way as the overall financial health of your business. Most lenders require a minimum Credit Score of $500, at minimum six months of business and more than $30,000 in annual revenues.

Small business loan products are:

Cash advance for merchants

Invoice factoring

Line of credit

Working capital

Expanding business

Equipment financing

Small business administration (SBA) loans

You can expect to pay more fees and interest rates when you’re not credit-worthy as an owner of a business. When you apply for certain loan products, like an invoice factoring loan or a merchant cash advance These loans depend upon future revenue or on funds that has been invoiced but not received.

We looked at 19 different small business loan lenders to find the best options available to those with poor credit. Rates and terms for loans must be affordable, which is why they were crucial factors in our assessments. We also considered authentic reviews from customers and credit score requirements and loan amounts that are available.

The Best Small Business Loans for Bad Credit for 2023

Best Overall: OnDeck

The best short-term loans: PayPal

The Best Credit Line: Lendio

Best for Long-Term Financing: Rapid Finance

Most effective for high revenue Accurate

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 An SBA Loan?

Can I Get a Business Loan With Bad Credit?

What Is the Easiest Business Loan you can get?

Methodology

Top Overall OnDeck

OnDeck

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OnDeck is the best overall small firm loan lender for those with bad credit, as it accepts credit scores of 625 and it’s possible to fund same-day. As long as you’ve been running your business for over one year, have an account with a bank for business, and at minimum $100,000 in annual revenues and you’re eligible for the loan.

Pros

625 minimum credit score

It is possible to fund the same day.

Apply for more money when you’ve repaid half of the original loan

Cons

Very high interest rates

Requires daily or weekly repayment

Businesses that are located in Nevada, North Dakota, South Dakota, and in certain specific industries

It was established in 2006 and OnDeck is a publicly traded small-business lender that works via phone and online. It is the most comprehensive small business lender for bad credit as to be able to get a loan you need a minimum credit score of 625. This is less than what many lenders will permit. In addition, following loan being approved, you will receive your funds as soon 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 take out loans ranging between $5,000 to $250,000 and credit lines that range that range from $6,000 to $100,000. The amount that you can be borrowed is contingent on your company’s revenue.

Repayment terms for term loans can be up to 24 months, and 12 months for a line of credit loan. For terms of a loan after you’ve paid 50% of your loan, you can apply for a larger amount and won’t have to pay any remaining interest on your existing loan. In contrast to other lenders, the repayments are made on a regular basis, either weekly or daily, depending on the business details you supply to OnDeck.

The minimum APR for both term loans as well as line of credit loans is 29.9 percent in January 2023. If you pay off the loan earlier could result in the remaining interest being removed. But, this benefit for prepayment choice will result in that you pay a higher interest rate. OnDeck will also take a blanket lien on all assets owned by the company and requires personal guarantees.

Best Short-Term Loans PayPal

LoanBuilder

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We chose PayPal LoanBuilder as the lender that offers the most short-term loans because it offers loan terms ranging from 13 to 52 weeks. Your minimum credit score to qualify for an loan is 580, and the loan can be funded as early as the next business day.

Pros

Credit score minimum 580

The loan terms range from 13 to 52 weeks

Receive funds as soon as the next business day

Cons

It is required to have a business income of $33,300 or more per year

No financial benefit for paying the loan early, as the entire fee is due upon payoff

Startups are not available for this.

PayPal is an online payment platform that is providing short-term small-business loans called LoanBuilder. This loan is also called a Business Loan, which is exactly the same. The lending is done through WebBank and is a member of the FDIC. This is the best short-term small business loan service for those with bad credit because loan terms are up to a maximal of 52 days and you only need 580 points of credit to be eligible.

The loan application can be done online or on the phone in five to 10 minutes. The approval is immediate. Once approved, you will receive funds of $5,000 to $150,000 directly into your bank account by the next business day.

A blanket lien as well as personal guarantees are required to obtain an loan. Automated weekly payments are made directly out of your business bank account. While you can’t adjust the amount of time you pay however, you can choose which day of the week payments are made. Should a payment fail it will result in a $20 fee for non-sufficient funds (NSF) cost.

If you make your payments regularly, you won’t have to pay any charges other than one-time charges for borrowing calculated as a percentage of the loan amount, as contrasted to the traditional APR. This means you won’t save any money by paying off the loan early.

Best Line of Credit Lendio

Lendio

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If you require flexible financing, you should consider an unsecured credit line with Lendio. You’re not obligated to utilize all funds, and you’ll not be charged for funds you don’t need. Many people think of a line of credit like security nets – it’s there in case you require it.

Pros

Credit score 560 is the minimum requirement for credit.

You must pay the interest only on amount you have used

Application takes just 15 minutes

Cons

The minimum amount is $50,000 in annual revenue

The funding process can take between one and two weeks

The loan terms are limited to between one and two years

Lendio is a small-business lending marketplace that was launched in 2011 that matches businesses with 75+ different lenders to help them get the money they require. Since Lendio doesn’t create the loan, you receive several offers and you can choose the one that is most suitable to your requirements. This is the ideal option for small business owners with poor credit since you just require a credit score of 560 and there is no obligation to utilize all of your money. Additionally, you do not pay any interest on the unused funds.

Line of Credit applications last 15 minutes and are an excellent option for businesses at least six months of age with $50,000 in annual revenue. Business owners require at least a minimum credit score of 560 or higher and be prepared to wait two weeks to receive funding. The terms of loans are between one and two years.

With a line of credit you are able to borrow against it as frequently as you want, provided that you don’t exceed your credit limit. You can borrow between $2,000 and $500,000 with interest rates of 8% to 24 percent. Depending on the lender you sign with, they may request an individual guarantee.

Your repayment amount and frequency will depend on the lender you select. However, the longer you’ve been in business and the higher your score on credit, the lower your payments will be.

The best option for long-term financing. Fast Finance

Rapid Finance

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With Rapid Finance, you can take out loans of up to $1 million dependent on the amount you earn each month, and have loan terms that range from 60 months. This lender will look at the entire condition of your business, not just your personal or business credit score when determining whether your company is eligible for funding.

Pros

Loan terms up to 60 months

Looks at overall business health and not just the credit score

Funds available within hours after approval

Cons

Repayment details not available online

Rates on interest not accessible online

Rapid Finance is a sister company of Quicken Loans and offers lending solutions for medium and small businesses. The site has great reviews and has some of the most long-running business loan terms at 60-months (most lenders offer only two or less years). This makes it the ideal small-business loan option for long-term financing with poor credit. In addition, when you apply for the loan typically, you will receive approval and funds within minutes.

To be eligible to receive a loan the business you are operating must be at least 3 to 6 months old to be eligible for many of its small business loans. However, some loan kinds, like the majority of its short-term loans need minimum two years in business. A blanket lien is required.

Rapid Finance advertises daily, monthly or weekly installments However, the website provides few details beyond that. The rates for interest are not published online, so it is essential to contact customer service for repayment details.

Most effective for high revenue credibility

Credibly

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To be eligible for a small-business loan through creditworthiness, you have to show an income of at least $15,000 per month, which makes it a great option when you earn revenue. It is easy to get funds, as is the credit minimum of 500.

Pros

500 minimum credit score

Available to businesses with a minimum of six months’ experience

Offers up to $400,000 and cash as early as the next day

Cons

Requires revenue of at least $15,000 per month.

Weekly or daily repayment

Credibly is a credit union which was founded in 2010 and provides one of the lowest minimum credit scores (500) among all the lenders we reviewed. The reason they’re able to achieve this is because it makes it the best choice for small companies with large revenues. Businesses need to have a minimum monthly revenues of $15,000 and operate for at least 6 months. You’ll also have higher fees that other lenders.

You can choose from many different kinds of small business loans:

Working capital loan

Business expansion loan

Business line of credit

SBA loan

Cash advance for merchants

Equipment financing

Invoice factoring

Based on the credibly loan product you select You can take out loans up to $400,000 with loan terms up 24-months.

Credibly charges a 2.5 percentage origination fee, in addition to your factor rate. The factor rate begins at 1.15. If you take out the $ 10,000 loan at a rate factoring of 1.15 you’ll have to have to pay $1,500 in fees plus the 2.5% origination fee, on a $10,000 loan.

The Bottom Line

Small-scale business loans can help you grow your business to cover payroll, pay for supplies, and control cash flow. If you’re a poor creditor it may be difficult, however there are many loan options for those with credit scores of as small 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, especially if you’ve got bad credit because it offers immediate funding for those with a score of 625. It also rewards loyalty–after paying back half your loan you are able to apply for additional funds and won’t be charged for any interest on your original loan.

Compare Providers

Small Business Loan Gets the most important Benefit

OnDeck

Best Overall Same-day funding with a minimum credit score 625

PayPal

Best Short-Term Loans Loan terms between 13 and 52 weeks

Lendio

Best Line of Credit Pay interest only on the money you use, with no obligation to use it

Rapid Finance

Ideal for long-term financingUp to 60 months as well as fast financing

Credibly

The best option for high revenueCredit score minimum of 500 if you have $15,000 in monthly income

Frequently Asked Questions

What is a Personal Guarantee?

A personal guarantee means that the business owner is responsible for the business’s obligation in the event that the business is unable to repay it. This helps protect against default by the loaner and makes it easier for businesses to qualify for a loan that they may not be able to without a personal guarantee.

What Credit Score Do You need to get An SBA Loan?

The Small Business Association (SBA) does not have the minimum credit score needed for obtaining for an SBA loan. However, SBA loans will be provided by lenders who may require a minimum score. Typically, this minimum is around 620.1 But the higher your score is, the more likely you are to be approved.

Is It Possible to Get a Business Loan Even With Poor Credit?

It is possible to obtain an enterprise loan with bad credit. Certain lenders do not require an upper limit on credit scores and take into consideration their overall financial health and the business instead. You can however expect to pay higher costs or pay a higher rate in the event of 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 the loan is secured by collateral, and the lender gets that collateral if the business owner is in default on the loan. The collateral that is pledged generally comprises inventory, property equipment, savings accounts or blanket liens. It also includes personal guarantees.

How to Choose the most effective Small Business Loans for Poor Credit

We evaluated 19 of the top small-scale commercial loans available and we narrowed it down to the top six choices for those with bad credit based on several aspects and factors. We looked at rates, credit score requirements, loan amounts, and the repayment conditions. Customer service reviews sales, customer service, and the ease of use factored heavily in our selection of an entrepreneur-friendly loan is supposed to be a pleasurable easy experience for entrepreneurs.

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Article Sources

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Reviews

Personal Loan Provider Rating Methodology

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