Business Loans

Best Business Loan Options For Bad Credit

Dec 08, 2023 • 10+ min read
Proud business owner in front of her shop
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      Have you ever wondered why lenders pay such close attention to your credit score? It’s because they’re protecting their assets and want to determine whether they can trust you to consistently repay the money. If your credit score reflects a solid track record, you’ll get serious consideration. If you have major blemishes in your past, many lenders take defensive action.

      Of course, we realize the life of an entrepreneur is full of risk. We’ve all collected our share of bumps and bruises along the way. So there’s no shame in a less-than-stellar credit score. And if you feel like your bad credit is keeping your business from achieving its potential, you’re not alone. However, don’t let one or two rejected loan applications keep you down. It is possible to get still business loans with bad credit.

      Best business loans for bad credit.

      The following list highlights lenders from our selection of best business loans that offer minimum credit requirements below 650 and have a lower minimum credit score requirement than their counterparts.

      Lender/funder*Best forLoan/financing amountMin. time in businessLoan/financing termMin. credit scoreTime to funds(after approval)
      Headway CapitalLine of credit$5,000- $100,0001 year12-18 months615Same day
      Ready CapitalSBA 7(a)$10,000-$5 million2 years7-25 years64030-60 days SBA turnaround
      ClickLeaseEquipment financingUp to $20,000Any2-5 years520Same day
      OnDeckBusiness cash advance$5,000-$250,0002 years6-18 months625Same day
      Raistone CapitalLarge facility invoice factoring$50,000-$500 million1 year30-180 daysN/A1 business day
      Gillman-BagleyInvoice factoring$50,000-$10 million3 months30 daysN/A1 business day
      Eagle Business FundingTransportation & trucking invoice factoringUp to $5 millionNoneNone, they take on the invoice repaymentN/AAs little as 48 hours

      How a bad credit score impacts your business loan options.

      Credit score requirements for business loans vary by lender and the type of loan. No credit requirements are the same, so you’ll always need to do your due diligence to find your best opportunities. This is especially true for bad credit loans online.

      Traditional banks typically require good or excellent credit to qualify for a business loan. This means you should have a personal credit score of at least 670, although some banks will consider applicants with credit scores in the low 600s. If you’re applying for a long-term or SBA loan, banks may want to check your business credit score in addition to your personal credit score. In this case, you’ll want to have excellent business credit, as well—a Dun & Bradstreet score of 80 or above should suffice.

      Where to find business loans for bad credit.

      There’s still hope for business owners with bad credit. While big banks tend to offer the lowest interest rates, plenty of other affordable lenders out there offer bad credit loans online.

      Lending Marketplaces

      Lending marketplaces have opened the door for a new range of business owners to access business loans. These marketplaces are home to a wide range of lenders and leverage technology to connect borrowers with a loan that suits their needs and credit profile.

      Loans from these lending marketplaces have a much higher approval rate than those from traditional banks. They also tend to be much easier to apply for, and you’ll often receive funding very quickly. This makes them an ideal source of loans for people with bad credit.


      Microloans are exactly what they sound like⁠—small loans. These loans are geared toward entrepreneurs and are, therefore, easier to qualify for than traditional loans. 

      No credit? That’s not necessarily going to be a roadblock. Your microloan will typically be fulfilled by several lenders pooling their money together, so each lender can spread their risk among many different small loans. This feature makes peer-to-peer lenders more willing to lend to people with bad credit. However, if you don’t have good credit, you will end up paying higher interest rates.


      Community Development Financial Institutions (CDFIs) are non-profit or community-based financial institutions that offer loans to individuals and businesses in underserved communities. These institutions prioritize helping those who have historically been denied access to traditional financing options, which often includes business owners with bad credit.

      CDFIs typically perform a more holistic evaluation of an applicant’s creditworthiness, considering factors such as their character, community involvement, and potential for success. This approach to lending has made CDFIs a popular choice for business owners with bad credit.

      Some examples of CDFIs include Accion and the Opportunity Fund. You can find more information about CDFIs through the CDFI Fund.

      Types of loans for bad credit.

      It’s important to know how to get a business loan if your credit isn’t in a great place. And there is a trio of financing products that often fit the bill perfectly. These loans for bad credit options are different from typical loans both in their structure and their low barrier to entry.

      Let’s review each of the types of loans for bad credit and some of their unique attributes:

      1. Business lines of credit 

      A business line of credit is a financing option that functions a lot like a credit card. To qualify, you’ll need to have a credit score of 600 or higher, have a business that’s been operating for at least six months, and make $50,000 or more a year.

      2. Business cash advance

      A business cash advance is a strong choice for business owners with bad credit because the financing eligibility is primarily based on the company’s revenue and other financials. The approval process is typically fast, so it’s also good for companies that need immediate access to capital. Lenders usually require daily payments that are automatically debited from your business account. In addition to the principal balance, you’ll also pay a factor rate. Your daily payments are usually calculated as a fixed percentage of that day’s sales, which can help you avoid overleveraging your business.

      3. Invoice factoring

      Lenders who offer invoice factoring focus on your business’ future earnings based on your current accounts receivables, so most lenders won’t look at your credit score. Some will have other minimum requirements, such as time in business and monthly revenue. Most lenders will also have limitations on the industries with which they will work, with some specializing in e-commerce and others focused solely on B2B or B2G brands.

      4. Equipment financing

      Equipment financing helps you finance specific purchases, whether it’s a piece of heavy machinery or software to help run your company more efficiently. In the case of equipment leasing, the purchased asset is used as collateral, which helps to widen eligibility requirements and keep interest rates lower than with many other options. 

      Most lenders have a one-year minimum time in business requirement, as well as a minimum annual revenue. A personal credit score is required, but minimums start in the 500’s.

      Boosting your odds of qualifying for a business loan despite bad credit.

      It’s not just about finding the right lender—you also have to make yourself more appealing to them. Here are a few strategies to consider:

      Improve your credit score – It’s easier said than done, but the most reliable way to make yourself attractive to lenders is by fixing your credit. Pay off outstanding debts, make sure you’re making all your current payments on time, and check your credit report for errors.

      Offer collateral – If you can provide assets that the lender can seize in case you default on your loan, they may be more willing to work with you. These assets could be equipment, real estate, or other business properties.

      Find a co-signer – If someone with a better credit score is willing to co-sign for your loan, that can greatly increase your chances of approval. However, remember that this person will be responsible for your loan if you can’t make the payments.

      Increase your cash flow – Lenders want to see that you’ll be able to pay back the loan. If you can show that your business has a steady cash flow, you’re more likely to secure the loan.

      Build a strong business plan – As mentioned earlier, a solid business plan can go a long way. It shows that you’re serious about your business, and it gives the lender confidence in your likelihood of success.

      By following these steps, you can improve your chances of being approved for a business loan, even with bad credit. Remember, bad credit isn’t a death sentence. It’s just a hurdle to overcome—and with the right approach, you can do it.

      How to improve your credit score.

      Improving your credit score takes time and effort, but it is worth it in the long run. Here are some steps you can take to improve your credit score:

      Pay off outstanding debts – Focus on paying off any outstanding debts as soon as possible. This will not only improve your credit score, but also save you money in interest.

      Make your payments on time – Late payments can significantly impact your credit score. Make sure you are making all of your payments on time, whether it’s for a loan, credit card, or bill.

      Monitor your credit report – Regularly check your credit report for any errors or discrepancies. If you find any, dispute them with the credit bureau to have them corrected.

      Reduce your credit utilization – Your credit utilization ratio is the amount of available credit you’re using. Aim to keep this below 30%, as it could positively impact your credit score.

      Don’t apply for too many new lines of credit – Each time you apply for a new loan or line of credit, it results in a hard inquiry on your credit report. Too many of these can negatively impact your score.

      In conclusion, having a bad credit score isn’t a dead end for business owners. There are several avenues available (Ex: lending marketplaces, microloans, and CDFIs) that are designed to help businesses with less-than-stellar credit histories. Compare small business loans from multiple lenders with a single application through Lendio.

      Quickly compare loan offers from multiple lenders.

      Applying is free and won’t impact your credit.

      *The information contained in this page is Lendio’s opinion based on Lendio’s research, methodology, evaluation, and other factors. The information provided is accurate at the time of the initial publishing of the page (December 8, 2023). While Lendio strives to maintain this information to ensure that it is up to date, this information may be different than what you see in other contexts, including when visiting the financial information, a different service provider, or a specific product’s site. All information provided in this page is presented to you without warranty. When evaluating offers, please review the financial institution’s terms and conditions, relevant policies, contractual agreements and other applicable information. Please note that the ranges provided here are not pre-qualified offers and may be greater or less than the ranges provided based on information contained in your business financing application. Lendio may receive compensation from the financial institutions evaluated on this page in the event that you receive business financing through that financial institution.

      About the author
      Grant Olsen

      Grant Olsen is a writer specializing in small business loans, leadership skills, and growth strategies. He is a contributing writer for KSL 5 TV, where his articles have generated more than 6 million page views, and has been featured on and Grant is also the author of the book "Rhino Trouble." He has a B.A. in English from Brigham Young University.

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