If your credit isn’t great, getting a loan from a bank or credit union may be difficult. Bad-credit business loans are available from alternative sources, like online or nonprofit lenders.
Borrowers with poor credit are considered riskier, so available loans will likely be more expensive as a result. If you need a bad-credit business loan, shop around to get the best terms possible and make sure the payments will be manageable.
Here are small-business loans for borrowers with bad credit — defined by FICO as a score from 300 to 629 — and more information on how to qualify for financing.
How much do you need?
We’ll start with a brief questionnaire to better understand the unique needs of your business.
Once we uncover your personalized matches, our team will consult you on the process moving forward.
Here are 6 bad credit business loans options for you
Lender | Best for | Max loan amount | Min. credit score | Next steps |
|---|---|---|---|---|
OnDeck - Online term loan with Fundera by NerdWallet | Best for Short-term loan for bad credit | $250,000 | 600 | with Fundera by NerdWallet |
Fundbox - Line of credit with Fundera by NerdWallet | Best for Business lines of credit for bad credit | $150,000 | 600 | with Fundera by NerdWallet |
Bluevine - Line of credit with Fundera by NerdWallet | Best for Business lines of credit for bad credit | $250,000 | 625 | with Fundera by NerdWallet |
OnDeck - Line of credit with Fundera by NerdWallet | Best for Business lines of credit for bad credit | $100,000 | 600 | with Fundera by NerdWallet |
Triton Capital - Equipment financing with Fundera by NerdWallet | Best for Equipment loan for bad credit | $250,000 | 600 | with Fundera by NerdWallet |
SBA Microloan with Fundera by NerdWallet | Best for SBA loan for bad credit | $50,000 | 620 | with Fundera by NerdWallet |
Our pick for
Short-term loan for bad credit
If your credit score is at least 600, you may be able to qualify for a short-term loan of up to $250,000. Short-term loans are good for specific, one-time purchases.
OnDeck - Online term loan
Max Loan Amount
$250,000
Min. Credit Score
600
Est. APR
9.00-99.00%
OnDeck offers a fast term loan for small-business owners with less-than-stellar credit who want to expand.
May fund quickly
Our picks for
Business lines of credit for bad credit
Lines of credit may be available from online lenders if your credit score is at least 600. You only pay interest on the funds you draw from the credit line, giving you more flexibility than you get with a term loan.
Fundbox - Line of credit
Max Loan Amount
$150,000
Min. Credit Score
600
Est. APR
10.10-79.80%
Fundbox offers a business line of credit to fill a cash-flow gap, and qualifying is easier than with other lenders.
May fund quickly
Bluevine - Line of credit
Max Loan Amount
$250,000
Min. Credit Score
625
Est. APR
15.00-78.00%
Bluevine's line of credit provides fast working capital for short-term borrowing needs.
May fund quickly
OnDeck - Line of credit
Max Loan Amount
$100,000
Min. Credit Score
600
Est. APR
11.00-61.90%
OnDeck offers a fast line of credit for small-business owners with less-than-stellar credit who need to manage cash flow or buy inventory.
May fund quickly
Our pick for
Equipment loan for bad credit
The equipment you purchase with this type of financing serves as collateral for the loan, meaning online lenders may be more flexible with credit qualifications.
with Fundera by NerdWallet
Triton Capital - Equipment financing
with Fundera by NerdWallet
Max Loan Amount
$250,000
Min. Credit Score
600
Est. APR
4.99-25.00%
Triton Capital offers fast equipment loans up to $250,000 for businesses in a range of industries.
Our pick for
SBA loan for bad credit
Microloans are offered through nonprofit, community-based organizations, which may be more willing than some other lenders to work with those who have bad to fair credit.
SBA Microloan
Max Loan Amount
$50,000
Min. Credit Score
620
Est. APR
8.00-13.00%
The average microloan is roughly $13,000, according to the Small Business Administration.
How Much Do You Need?
It’s possible to get a business loan with bad credit if your company is otherwise in good shape. Lenders have different qualifications, and are likely to consider the following in addition to your credit score:
- Time in business: Minimum time in business requirements vary by lender but may range from six months to two years. The longer you’ve been in business, the better your chances are of being approved for a loan.
- Annual revenue: Lots of loans, even ones for borrowers with bad credit, have minimum annual revenue requirements. Showing that your business consistently meets or exceeds these requirements may help offset a bad credit score.
- Cash flow: Lenders will be more likely to fund businesses that are profitable and have reliable cash flow.
- Collateral: How much collateral you need for a business loan depends on the lender, loan amount and type of loan. Offering sufficient collateral makes the loan less risky for the lender, since they can liquidate that collateral if you default on loan payments.
- Reason for low credit score: It will likely be harder to get approved if a recent bankruptcy or loan default is what’s dragging your score down. If that's the case, consider ways to build your credit score before applying for a loan.
- Check your credit. Before applying for a small-business loan, check your credit report to know what lenders are going to see. You can get a free personal credit score on NerdWallet, and pull your personal credit report from the three major reporting bureaus for free at AnnualCreditReport.com. Business credit scores are available from Experian, Equifax and Dun & Bradstreet.
- Wait, if you can. If your credit score is lower than you’d like, consider ways to build it up before applying for business financing. For example, look for any errors on your credit reports and dispute them with the appropriate credit bureau. Other credit-strengthening strategies can include making payments more often and paying down or paying off debt.
- Shop around. If you need financing now, bad credit likely means you’ll have fewer options to choose from. But don’t let that stop you from shopping around. A low credit score may result in a high interest rate, which could make it difficult to repay your new loan — and leave you worse off financially than you were when you started. By working to get the best deal possible, you’ll better position yourself for success.
- Get a co-signer. If a bad personal credit score is the only factor holding you back from being approved for a loan, a co-signer with good credit may be able to help you. However, having a co-signer also raises the stakes, since the co-signer will be on the hook if you can’t repay the loan.
- Double down on your strengths. If you have lots of available collateral, emphasize that in your loan application and consider offering more than the minimum amount. The same goes for highlighting impressive annual revenue, time in business and cash flow. Showing off the ways in which your business is successful may help make your application more attractive to lenders, even if your credit score is lagging.
Banks and credit unions likely won’t approve you if you have bad credit. But these alternative sources may let you get a business loan with a spotty credit history:
- Online lenders: Most online business loans require a minimum personal credit score from 500 to 650. But a few have no minimum credit score requirement, focusing on factors like your business’s cash flow instead. Online lenders offer easier approvals and faster funding than other business lending options, but they typically charge higher rates — even for borrowers with good credit.
- CDFIs: A community development financial institution, or CDFI, receives government funding to provide banking access to low-income or underserved communities. CDFIs are often banks and credit unions, but have less strict credit requirements for lending. If you’re eligible for CDFI financing, you could get a competitive interest rate. Funding can be slower than with online lenders, though.
- Microlenders: Businesses with bad credit may be able to get microloans from nonprofit lenders, since making money isn’t nonprofit lenders' primary driver. The downside of a microloan is right in its name: micro. Funds typically top out around $50,000, which may not be enough for your company’s needs.
- Invoice financing: Invoice factoring or financing can turn unpaid customer invoices into immediate cash and is best for business-to-business companies. While lenders may still check your credit score, approvals are based mainly on the value of your invoices and your customers’ payment histories.
- Merchant cash advances: This option lets bad-credit borrowers tap into their own business for financing by essentially selling their future sales at a discount. But merchant cash advances should be a last resort, as rates can reach triple digits.
- Business credit cards: Business credit card approval is based on your personal credit score, and you’ll need a minimum credit score of 630 to qualify for most cards.
If your company is less than a year old with little revenue, it’ll be tough to find a startup business loan — whether your credit is good or bad. Here are a few suggestions:
- Turn to nonprofits and CDFIs first. Lenders that participate in the SBA microloan program may be willing to work with newer businesses that have rocky credit histories. Many of these lenders focus on issuing loans to traditionally underserved businesses in their communities.
- Beware of deals that sound too good to be true. A few additional lenders offer startup business loans for bad credit, but these options can be expensive. That will also likely be the case for any startup business loans with no credit check or guaranteed approval. Be wary of such promises.
- Consider a secured personal credit card. These cards require a cash security deposit when you open the account. But if you use the personal credit card responsibly, you’ll improve your personal credit score and get back your deposit.
The best business loan is generally the one with the lowest rates and most ideal terms. But other factors — like time to fund and your business’s qualifications — can help determine which option you should choose. NerdWallet recommends comparing small-business loans to find the right fit for your business.
Last updated on December 1, 2021
To recap our selections...
6 Best Business Loans for Bad Credit of July 2022
- OnDeck - Online term loan: Best for Short-term loan for bad credit
- Fundbox - Line of credit: Best for Business lines of credit for bad credit
- Bluevine - Line of credit: Best for Business lines of credit for bad credit
- OnDeck - Line of credit: Best for Business lines of credit for bad credit
- Triton Capital - Equipment financing: Best for Equipment loan for bad credit
- SBA Microloan: Best for SBA loan for bad credit
Frequently Asked Questions
Some online and nonprofit lenders accept borrowers with bad personal credit scores (FICO scores from 300 to 629). A lower credit score may result in a pricier loan, so building your credit first may qualify you for cheaper options.
Before applying for a loan, check for ways to boost your credit score, and wait until it’s climbed a bit if you can. Otherwise, shop around for the best possible deal. Bad-credit business loans generally have higher interest rates, so make sure that you have the funds to repay them on schedule.
Most lenders require a minimum FICO credit score ranging from 500 to 650, but some have no minimum requirement. Your annual revenue and time in business may also be considered on your application. Shop around and compare small-business loans to get one that fits your needs.
Business lines of credit often require a minimum credit score of at least 600, and some as high as 720.