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Best Startup Business Loans for Bad Credit of June 2022

Startup business loans are available if you have bad credit, but shop carefully to keep costs in line.
Written by Ryan Lane
Edited by Robert Beaupre
Last updated on April 29, 2021

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Online lenders offer startup business loans for bad credit, but they can be expensive. Make sure your new business can handle the potential costs of any debt before taking it on.
To overcome poor credit and get funding, startups will need a track record of success — even if it’s only a few months. Reputable lenders won’t offer guaranteed approval.
Here are startup business loans for bad credit (a FICO score below 630), as well as alternatives if you can’t qualify for a small-business loan until your company grows.

How much do you need?

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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 is 1 option for you

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Fundbox - Line of credit

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Best for Startups with at least six months in business$150,000600

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Our pick for

Startups with at least six months in business

Fundbox offers business lines of credit if your personal credit score is at least 600. You must also have two months of activity in Fundbox-supported accounting software or three months of transactions in a business bank account to qualify.

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Fundbox - Line of credit

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Max Loan Amount


Min. Credit Score


Est. APR


Depending on your creditworthiness and your business's financials

Fundbox offers a business line of credit to fill a cash-flow gap, and qualifying is easier than with other lenders.
May fund quickly

How Much Do You Need?

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Can you get a startup business loan with bad credit?

It’s possible to get a startup business loan with bad credit, but options will be limited — and potentially costly. Here are a few things to note about bad credit business loans:
  • You likely won’t qualify for bank or government loans. These typically have the most favorable terms but come with strict minimum qualifications for credit scores and years in business. For example, you’ll likely need to be in business for at least a year to get a bank small-business loan, and loans backed by the U.S. Small Business Administration will require a good credit score (at least 690).
  • Alternative loans are available, but they cost more. Online lenders may offer startup business loans to companies less than a year old or those whose owners have lower credit scores. But because of that risky lending profile, you’ll likely pay more — annual percentage rates can reach 99%. Your startup will also need to be generating income already. For example, invoice factoring from BlueVine requires at least $10,000 in monthly revenue to qualify.
  • CDFIs may offer competitive rates — if you qualify. Community Development Financial Institutions, or CDFIs, receive funding to help underserved communities. Startups that lack resources, opportunity or financial access may be able to get a business loan from a CDFI, even with bad credit. But approvals can take time, so your company will need to be able to wait for funding.
  • Microlenders may cover smaller amounts. Similar to CDFIs, microlenders focus on providing capital to disadvantaged individuals, such as minority business owners, who may be underbanked and have insufficient credit. If you qualify, a microloan can be a good choice for bad credit startups with small funding gaps. Loans are usually $50,000 or less.
Be wary of any lender that advertises guaranteed approval or startup loans with no credit check. At best, those may be expensive products. At worst, they could signal predatory lenders that will potentially hurt your new company more than help it.

Types of bad credit startup business loans

Startups with bad credit will likely be limited to online lenders. But those lenders may offer multiple types of business loans to choose from, including:
  • Business lines of credit. These are a flexible way to fund your startup, allowing you to take out cash as needed up to a borrowing limit.
  • Invoice factoring or financing. If you’re running a B2B company, you may be able to access unpaid customer invoices earlier by selling them to a third party (“factoring”) or borrowing against their value (“invoice financing”).
  • Personal business loans. If your startup isn’t eligible for any form of financing, you could consider a personal loan. These loans are credit-dependent, but options are available for borrowers with bad credit.
  • Business credit cards. If your credit is at the high end of what’s considered a bad score (below 630), you may be able to qualify for a business credit card.
  • Merchant cash advances. Lenders provide a lump sum that you pay back daily or weekly. Because of their effect on cash flow and high costs (APRs can reach 350%), merchant cash advances should typically be a last resort.
Improving your credit can unlock additional financing options like SBA loans as your company grows. Ways to build credit include paying down debt and fixing mistakes in your credit report. Startups can also look to build business credit through actions like updating business information and uploading financial statements to business credit bureaus.

Alternatives for bad credit borrowers

Small-business financing that doesn’t require debt may be a better short-term fit for some startups with bad credit. These options can include:
  • Applying for small-business grants.
  • Selling equity, or shares of your business, to investors, friends or family.
  • Using a crowdfunding platform to raise money.

Compare more small-business loan options

If none of the loans included here works for you, or if you’d like to compare loan options, NerdWallet has a list of small-business loans that are best for business owners. All of our recommendations are based on the lender’s market scope and track record and on the needs of business owners, as well as rates and other factors, so you can make the right financing decision.
Last updated on April 29, 2021

To recap our selections...

Best Startup Business Loans for Bad Credit of June 2022

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