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Best Small Business Loans for People with Bad Credit

Funding for Borrowers with Less-Than-Perfect Credit

By Kathy Haan

Updated 21 October 2022

Fact checked by Vikki Velasquez

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When you have bad credit even if you have bad credit, you are still able to get a small business loan. It’s because the credit score isn’t important in the same way as the overall financial health of your company. Many lenders require a minimum credit score of 500, at least six months in business, and more than $30,000 in annual revenues.

Small-scale business loan products comprise:

Merchant cash advance

Invoice factoring

Line of credit

Working capital

Expansion of business

Equipment financing

Small Business Administration (SBA) loans

You can expect to pay more costs and interest rates if you’re not credit-worthy as an owner of a business. When you take out specific loan products, for instance an invoice factoring loan or a cash advance such loans depend upon future revenue or funds that has been invoiced but not received.

We reviewed 19 different small business loan lenders to determine the best option for those with bad credit. Rates and terms for loans must be affordable, and these were key factors when evaluating our choices. We also considered authentic reviews from customers and credit score requirements and loan amounts available.

The Best Small Business Loans to help those with bad Credit for 2023

Best Overall: OnDeck

Best Short-Term Loans: PayPal

The Best Credit Line: Lendio

Ideal for long-term financing: Rapid Finance

Most effective for high revenue: Credibly

The Best Small Business Loans for 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 for An SBA Loan?

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

What is the most simple business Loan you can get?

Methodology

Best Overall OnDeck

OnDeck

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OnDeck is the best overall 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 operating for more than one year, have an account with a bank for business, and at least $100,000 in annual revenue, 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 the original loan

Cons

Very high interest rates

Requires weekly or daily repayment

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

In 2006, OnDeck was launched. OnDeck is an open-market small business lender that operates on the internet and via phone. It’s the top overall small business lender for bad credit as to be able to get an loan it is necessary to have a minimum credit score of 625, which is less than what most providers permit. Plus, after loan approval, you will get your funds as early as the next business day. You will receive additional funds after you have paid off the half of the loan.

You can take out loans ranging between $5,000 and $250,000 and credit lines ranging that range from $6,000 to $100,000. The amount you can credit is contingent upon your business revenues.

The terms of repayment for term loans are up to 24 months, or 12 months for a line of credit loan. On the other hand, with a term loan, once you’ve repaid part of the loan and you’re able to apply for more money and you won’t be charged any remaining interest on the current loan. In contrast to other lenders, the repayments are made on a regular basis, either weekly or daily depending on the company details you supply to OnDeck.

The minimum APR for both long-term loans as well as lines of credit loans is 29.9%, in January 2023. If you pay off the loan earlier could cause your interest being removed. However, this prepayment benefit option will mean an increase in the APR. OnDeck will also take a blanket lien on all assets owned by the company and will require a personal 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 due to its loan durations ranging from 13 to 52 weeks. Your minimum credit score to be eligible for an loan is 580, and it can be funded as quickly as the next business day.

Pros

Minimum credit score of 580

Terms of loans ranging from 13 to 52 weeks

You can receive funds as early as the next working day

Cons

It is required to have a business income of more than $33,300 annually.

No financial benefit for paying the loan off early as the full fee is due upon completion of the loan.

Startups are not available for this.

PayPal is an internet-based payment platform that is providing short-term small-business loans called LoanBuilder. The loan is also called a Business Loan—it’s the same. The lending is done through WebBank which is a member of the FDIC. WebBank is the most convenient short-term small-business loan service for those with bad credit since loan terms can be a max of 52 weeks, and you require only 580 points of credit to be eligible.

The loan application is possible online or on the phone within five to 10 minutes, and approval is quick. Once approved, you will receive funds from $5,000 to $150,000 directly into your bank account by the next business day.

A blanket lien and personal guarantees are required for obtaining the loan. Automated weekly payments are made directly from your bank account. While you cannot alter the frequency of repayment but you can set the day of the week payments are made. In the event of a failed payment, there’s a $20 not-sufficient fund (NSF) cost.

If you pay your loan on a regular basis, you don’t have to be charged any additional fees, other than a one-time borrowing fee, based on a percentage of the total loan amount as contrasted to the traditional APR. This means you won’t pay any extra money by paying off the loan in advance.

Best Line of Credit Lendio

Lendio

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If you need flexible financing, think about a small business credit line from Lendio. You’re not obligated to use all the funds, and you’ll not pay for the funds you don’t utilize. Many people think of credit lines as security nets — it’s there in case you need it.

Pros

Minimum credit score of 560

You must pay the interest only on amount you have used

Application takes just 15 minutes

Cons

Must have $50,000 or more in annual revenue

The process of funding can take anywhere from one to two weeks

A loan term of between one and two years

Lendio is a small business lending marketplace that was launched in the year 2011 that connects businesses with over 75 different lenders to help them get the money they require. Since Lendio doesn’t create the loan, you receive multiple offers and can pick the one that’s most compatible with your needs. This is the ideal option for small business owners who have poor credit since you just need a 560 credit score and you are not required to utilize all of the funds. Plus, you pay nothing on the unused funds.

Line of Credit applications last about 15 minutes. They are an excellent option for businesses that are at minimum six months old with annual revenues of at least $50,000. Business owners need to have a minimum credit score of 560 or higher and be prepared to wait up to two weeks before receiving funding. The terms of loans are one to two years.

With a line of credit, you can borrow against it as often as possible provided you don’t exceed the limit of your credit. Borrow between $1,000 and $500,000 and pay interest rates of 8% to 24%. Depending which lender choose to work with, they might require a personal guarantee.

Your repayment amount and frequency will depend on the lender you choose. But, the longer you’ve been in business and the better you credit rating, the less your payments will be.

Ideal for long-term financing Rapid Finance

Rapid Finance

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With Rapid Finance, you can borrow up to $1 million, according to your monthly earnings, and have loan terms that range from 60 months. The lender will consider the entire performance of your company, not just your personal or business credit score to determine if your business is eligible to receive funding.

Pros

Loan terms up to 60 months

Looks at overall business health and not just an individual credit score

The funds are available within hours of 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 small and medium-sized companies. Rapid Finance’s website has received great reviews and has one of the longest business loan terms at 60 months (most lenders have just two or three years old). These reasons make it the most suitable small business loan option for long-term financing with poor credit. Plus once you’ve applied for an loan typically, you will get approval and funding within minutes.

To be eligible to receive a loan, your business must be at least between three and six months in age to be eligible for many of its small business loans. However, some loan kinds, like the majority of short-term loans are required to have at least two years in business. A blanket lien is required.

Rapid Finance advertises daily, weekly, or monthly payments, but the website offers only a few additional details. No interest rates are available online, which is why it’s necessary to reach out to customer support for details on repayment.

Best for High Revenue Credibly

Credibly

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To qualify for a small-business loan with Credibly, you must have an income of at least $15,000 per month, which is a fantastic option for those who earn. It is easy to get funds, and the minimum credit score is 500.

Pros

500 minimum credit score

Available to businesses that are at least six months old

Offerings of up to $400,000 and funds as soon as the next day

Cons

It requires a minimum of $15,000 per month

Daily or weekly repayment

Credibly is a loan provider which was founded in 2010 and offers some of the best minimum scores for credit (500) out of all the lenders we examined. The reason they’re able to achieve this is the reason it makes it the best option for small businesses with high revenue—businesses must have an annual revenue of at least $15,000 and operate for at least six months. You’ll also have higher fees than with other lenders.

Choose from several different types of small business loans:

Working capital loan

Business expansion loan

Business line of credit

SBA loan

Cash advance for merchants

Equipment financing

Invoice factoring

The credibly loan product you select You can take out loans up to $400,000 and enjoy loan terms that extend of 24 months.

The company charges you a 2.5 percentage origination fee in addition to your factor rate. This factor rate starts at 1.15. If you take out a 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 percent origination cost, for an $10,000 loan.

The Bottom Line

Small business loans help you expand operations and cover payroll costs as well as pay for equipment and manage cash flow. If you’re a poor creditor it may be difficult, however there are many loan options for those with credit scores that are as lower as 500. Some lenders don’t have minimum scores, but instead, look at the overall health of the business.

We suggest OnDeck for small-business loan requirements if you have poor credit since it provides instant funding, with a minimum score of 625. In addition, after having paid back the entire loan you are able to apply for more money and you won’t be charged for any interest on your original loan.

Compare Providers

Small-Business Loan Gets Key Benefit

OnDeck

Best overall Same-day financing and minimum credit score 625

PayPal

Best Short-Term Loans terms that range from 13 to 52 weeks

Lendio

Best Line of Credit You pay only the amount you spend but you are not required to make use of it

Rapid Finance

Best for Long-Term FinancingUp to 60 months as well as fast funding

Credibly

Best for High RevenueA minimum credit score is 500 if you earn $15,000 per month in revenue

Frequently Answered Questions

What Is a Personal Guarantee?

A personal guarantee means that the business owner assumes the company’s obligation in the event that the business is unable to repay it. This can protect the lender in the event of default, and also makes it easier for businesses to qualify for the loan when they might not be able to without a personal guarantee.

What Credit Score Do You Need for the SBA Loan?

The Small Business Association (SBA) does not set a minimum credit score required to secure an SBA loan. However, SBA loans can be obtained from lenders who may have minimum credit score requirements. Typically, this minimum is approximately 620.1 However, the better your score, 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 even if you have bad credit. Certain lenders do not require an upper limit on credit scores and take into consideration how healthy the company instead. You can however expect to pay higher fees or have a higher interest rate when you have poor credit.

What Is the Easiest Business loan to get?

The easiest business loan to obtain is one that is secured. This means that the loan is backed by collateral, and the lender receives that collateral in the event that the business owner fails to pay the loan. The collateral pledged usually includes property, inventory equipment, savings accounts, blanket liens, and personal guarantees.

How We Chose the Best Small Business Loans to Help People with Bad Credit

We looked at 19 of the best small commercial loans available and reduced it to the top six choices for people with poor credit, based on several features and considerations. We looked at rates, credit score requirements, loan amounts, and the repayment conditions. Reviews of customer service, sales, and user-friendliness weighed heavily in our selection of the smallest business loan should be a pleasant, stress-free experience for owners of businesses.

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