Easy to Get Business Loans With Bad Credit

The 10 Best Small Business Loans For Startups With Bad Credit

Most of these lenders will accept scores below 600. Compare these small business loans for bad credit to find the right startup loan for you.

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Getting a startup loan for your small business when you have a bad credit score can seem impossible. But while bad credit can make it more difficult to get a startup loan, there are still ways to finance your new business venture. There are even small business loan options for startups with no revenue yet.

To make things easier on you, we've put together a list of some of the best small startup business loan options for bad credit. We'll also look at what constitutes bad credit and what business lenders are looking for in your application.

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Table of Contents

• What Is Considered A Bad Credit Score?
• How To Get A Startup Loan With Bad Credit
  • Bad-Credit Startup Loan Application Tips
• 10 Best Startup Small Business Loans For Bad Credit
  • 1. National Business Capital: Best Flexible Requirements
  • 2. Lendio: Best For Equipment Financing
  • 3. Upstart: Best For No Credit History
  • 4. Fundbox: Best Short-Term Loans
  • 5. BlueVine: Best Line Of Credit
  • 6. Credibly: Best Merchant Cash Advances
  • 7. Avant: Best Small Personal Loans
  • 8. PayPal Working Capital: Best For PayPal Sellers
  • 9. Accion: Best Microloans
  • 10. Kiva: Best Crowdfunding
• Can You Get Startup Business Loans For Bad Credit Guaranteed?
• Alternative Startup Funding For Borrowers With Bad Credit
  • Small Business Credit Cards
  • Corporate Cards
  • Small Business Grants
  • Crowdfunding
• FAQs About Startup Small Business Loans For Bad Credit
• In Summary: 10 Best Startup Small Business Loans For Bad Credit

What Is Considered A Bad Credit Score?

Type Of Credit	Credit Score
Poor	300-579
Fair	580-669
Good	670-739

So, what's considered a bad credit score anyway? Personal FICO credit scores below 670 are considered subprime credit. Having a subprime credit score signifies to lenders that the borrower may have difficulty repaying their loan. However, there are two categories of subprime credit: bad/very poor credit and fair credit.

Credit scores under 580 are considered "bad" or very poor, based on the FICO credit scoring system. Scores ranging from 580 to 669 are considered fair (but are still subprime).

Though credit scores can go as low as 300, even "bad credit business loans" typically do not accept applicants with scores below 500, and some of these lenders require that borrowers have a minimum score of 580 or 600.

How To Get A Startup Loan With Bad Credit

Even if you have bad credit, you may still qualify for a startup small business loan. First, evaluate and compare different lenders that cater to new business owners who have bad credit. Generally, you should be able to find a startup loan as long as you have at least a few months in business and your credit score is at least 500. You'll also need to show that you have sufficient income (personal or business, depending on the lender's requirements) to repay the loan.

If you find a loan that you are interested in and are eligible for, it's easy to apply online. If you meet the minimum criteria and are "pre-approved," the lender will reach out and ask for more information for the underwriting process. Once you return the requested information, you will hopefully receive a "hard" approval and a loan offer. With most online lenders, you'll receive your funds as soon as 24 hours to a few days after accepting the offer. Get the step-by-step breakdown on the startup loan application process.

Bad-Credit Startup Loan Application Tips

The great thing about all of these bad-credit startup loans is that, with a few exceptions, the application process is quick, painless, and entirely online. However, startup business loans for borrowers with bad credit are not guaranteed. To increase your chances of startup business loan approval (even with bad credit or no revenue), here are a few tips for applying:

• Don't waste your time applying for startup loans that you don't meet the minimum qualifications for
• When it comes to loans you do meet the minimum qualifications for, apply for multiple loans and then compare your offers to choose the best one (there's no risk in getting pre-approved, as this usually only requires a "soft" credit check, which does not impact your credit score)

If you check out some loan or credit card options and are not pleased with the offers you're getting, you might consider:

• Taking steps to improve your personal credit score
• Looking into alternative business financing options such as crowdfunding
• Waiting until you've been in business 12 months, after which you'll qualify for more loans

10 Best Startup Small Business Loans For Bad Credit

We've gathered our picks for the best startup loans for small business owners with bad credit or no revenue. Explore options for crowdfunding, equipment financing, short-term loans, lines of credit, PayPal sellers, and more.

1. National Business Capital: Best Flexible Requirements

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Pros

• No credit check for certain financing products (if you meet other requirements)
• Relaxed time-in-business and revenue requirements if your credit is 650+
• Lends to marijuana industry businesses (with 1+ year in business)

National Business Capital is an online lending marketplace with 75+ lenders and a business model similar to Lendio's. Interested borrowers can choose from various types of business financing, including traditional small business loans, lines of credit, equipment financing, and SBA loans. Rates can be on the high side, but the financing is fast and easy to qualify for, even if you're a startup with bad credit.

Startups with bad credit will have the best luck qualifying for a small business loan or equipment financing loan through National Business Capital (their LOCs and SBA loans have higher minimum requirements). National Business Capital has very low credit qualifications for financing. However, applicants with a score of 650+ may be able to qualify for financing even if they don't have any time in business or sales revenue.

Interestingly, National Business Capital will lend to cannabis-related businesses if they have at least one year in business.

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2. Lendio: Best For Equipment Financing

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Pros

• Saves time by sending your application to multiple lenders at once
• Helps you figure out which financing product is best for your needs
• Lets you compare different loan offers so you can choose the best one

Cons

• Not all lenders in Lendio's network accept bad-credit applicants

Lendio is an easy-to-use online loan matchmaking service that lets you compare and apply to multiple business loans in just 15 minutes and get funded as soon as 24 hours. Lendio no longer publishes specific borrower requirements and can likely find lenders willing to work with poor credit scores. By using this service, you can prequalify for equipment financing, merchant cash advances (MCAs), short-term loans (STLs), lines of credit (LOCs), Small Business Administration (SBA) loans, and more.

Lendio is especially helpful if you're new to business financing and aren't sure which options you might qualify for or would work for your business. Lendio is also great for equipment financing, as the service makes it easy to apply to multiple equipment financing companies, including companies that accept businesses that have bad credit and have only been in operation for a few months. Lendio states that if you have bad credit but can show solid revenues for the past 3-6 months, you can qualify for equipment financing.

Lendio's network includes more than 75 lenders, including big names such as Kabbage Funding, OnDeck, Amex, and BlueVine. In the equipment financing space, Lendio connects with Balboa Capital, B2B Leasing, Simmons Bank, and others.

Any business can apply for Lendio, but for the best chance of getting funded, Lendio recommends that in addition to a 550+ credit score, you have six months in business and make at least $10K monthly.

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3. Upstart: Best For No Credit History

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Pros

• No time-in-business or business income requirement
• Builds personal credit
• Will consider applicants with no credit

Cons

• The origination fee is taken off the top of the loan

Personal loans are a way brand-new businesses can receive startup funds, even if you have no business credentials. One personal loan option for startups is Upstart, a lending platform that partners with banks to provide personal loans ranging from $1,000 to $50,000. Upstart's minimum acceptable credit score is just 580 (technically fair but still subprime). Notably, Upstart will also consider applicants with no credit—that is, individuals who don't have enough credit history to generate a FICO score.

Upstart's underwriting model uses education, employment, and many other variables to make a lending decision. That means college graduates and/or individuals with a steady employment history may have an advantage when applying. However, the only personal income requirement is that you make $12,000 annually.

Loans through Upstart have three or five-year terms, with monthly repayments. After you accept an Upstart loan offer, the funds will usually hit your account by the following business day. As far as rates, Upstart APRs typically range from 6.76%-35.99%.

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4. Fundbox: Best Short-Term Loans

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Pros

• Simple application
• Next-day funding
• No draw fee, prepayment fee, origination fee, or maintenance fees

Cons

• Doesn't accept very poor credit or brand-new businesses

Fundbox has two convenient lending products for newer businesses with subprime credit: revolving lines of credit and term loans. Though these short-term loans aren't a good fit if your credit is completely trashed or your business isn't making money yet, Fundbox loans are quite accessible to businesses that have six months under their belt and are already bringing in some revenue. Businesses will receive a funding decision within minutes of submitting your application, and funds can arrive in your account as soon as the next business day.

With a minimum credit score of 600 and a six-month minimum time in business, Fundbox is suitable for both startups and subprime-credit borrowers. Your business does need to be bringing in at least $100K annually (making Fundbox slightly easier to qualify for than BlueVine), and very poor credit applicants will not be approved.

You will also have to pay the loan quite quickly — in 12 or 24 weeks, depending on your offer — and the maximum borrowing amount is $150K. So larger and more established businesses will get better terms with another lender.

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5. BlueVine: Best Line Of Credit

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Pros

• On-demand access to funds
• Same-day funding
• Serves both B2B and B2B companies

Cons

• Doesn't accept credit scores below 600

BlueVine is one of our favorite online lenders in the small business lending space. Specifically, BlueVine offers small business lines of credit up to $250,000. The terms are fair and transparent, and BlueVine is also very easy to apply for—just provide a connection to your bank and some basic details about your business. This LOC is revolving, which means that you can withdraw funds at any time, and as you repay what you borrow, your credit line is replenished.

To qualify for a BlueVine LOC, you will need a credit score of 600 and 6 months in business, so while these LOCs are technically available to startups with bad credit, not all businesses will qualify. Still, BlueVine lines of credit are much easier to qualify for than bank lines of credit, or other online lines of credit that require good credit scores.

As well as lines of credit, BlueVine also offers business checking services and a Bill Pay service that allows businesses to pay their vendors with a credit card even if that vendor doesn't accept credit cards. In the past, BlueVine also offered invoice factoring, but the company recently suspended its invoice factoring product and has transferred all existing factoring customers to FundThrough.

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6. Credibly: Best Merchant Cash Advances

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Pros

• Can borrow up to $400K
• Will accept very poor credit
• Transparent rates and fees

Cons

• High revenue requirements

Credibly originates several types of short-term loans, including merchant cash advances and working capital loans up to $400K, business lines of credit up to $250K, and others. This company is startup-friendly — though you do need to have been in business for six months — and will accept you even if you have very poor credit. Woo-hoo!

Credibly's working capital loans and MCAs have a minimum required credit score of just 500, while business lines of credit are offered to applicants with 560+ personal credit. Note that some of Credibly's products, including its lines of credit, are made available through Credibly's network of external funding partners rather than through Credibly directly.

Credibly's revenue requirements vary based on product, but they are on the high side compared to those of some other online lenders; your business must be bringing in $15K/month ($180K/year) to qualify for a working capital loan or MCA. However, the money comes through fast, and the amounts you can borrow are pretty high considering the relaxed borrower requirements. Credibly is also transparent about its rates and requirements, listing all the information you need to know on its website.

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7. Avant: Best Small Personal Loans

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Pros

• No time-in-business or business income requirement
• Quick time-to-funding
• Monthly repayments

Cons

• A one-time administration fee is taken off the top of the loan

Avant is a reputable provider of small personal installment loans from $2K to $35K that can be used for business, including startup expenses. It also accepts credit scores that most personal lenders would balk at (as low as 580).

While Avant accepts subprime-credit (though not very-poor-credit) borrowers, you may be denied funding for other reasons, such as insufficient personal income to meet the incremental payments. It does not have any business income requirements, however.

Avant's rates are not cheap, with APRs ranging from 9.95% to 35.99%, but they are fair and not predatory (especially compared to a lot of other personal lenders, such as payday lenders).

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8. PayPal Working Capital: Best For PayPal Sellers

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Pros

• No credit check
• Easy, automatic repayments
• Quick access to cash

Cons

• Only available to PayPal sellers

PayPal Working Capital offers short-term loans that function similar to merchant cash advances. These loans haveno credit score requirements and are good options to consider if you already do business through PayPal.

As with most other short-term lending options, PayPal's Working Capital doesn't charge interest. Instead, you are charged a one-time fee that you repay along with the loan. PayPal will then collect a small percentage of your daily sales until you have repaid the loan and the fee.

The application can be easily accessed within your PayPal account, and PayPal does not check your credit at all because it's strictly based on your PayPal sales. If you have a PayPal Business or Premier account that's been open for at least three months and is processing a certain amount of sales ($15K/year for Business accounts or $20K/year for Premier accounts), you can get funded within minutes of accepting a loan offer. PayPal also offers business loans through LoanBuilder, and those loans are open to all businesses and not just PayPal sellers. However, businesses need at least nine months in business to qualify for a LoanBuilder loan.

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9. Accion: Best Microloans

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Pros

• Low-interest microloans
• Targeted to marginalized business owners
• Monthly repayments

Cons

• Loan offers limited by region

Accion is a nonprofit CDFI offering short- and medium-term installment loans to startups and existing businesses. These loan products mostly include micro-loans under $50K, but there are also some offers for loans as large as $1 million. Accion specializes in lending to minority-owned businesses and women-owned businesses.

If you have poor personal credit but need a small startup loan, Accion is one of the few reputable online lenders that can help you without screwing you over. The only caveat is that loans are offered on a regional basis. You'll only be able to apply to whichever loans (if any) are available in your area.

To qualify for an Accion loan, you need a credit score of 575 (or 550 in some areas) and sufficient cash flow to repay the loan. Startups also need to have less than $3K in outstanding debt, a business plan with a 12-month cash flow projection, and a partner referral (such as SCORE or SBDC).

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10. Kiva: Best Crowdfunding

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Pros

• No credit check
• No interest or fees
• Flexible repayment plans

Cons

• $1,000 limit on startup loans

Kiva U.S. is a nonprofit dedicated to helping small businesses succeed in their communities with interest-free financing. Kiva offers small, crowdfunded loans to entrepreneurs worldwide, but Kiva U.S. is for US-based businesses specifically. Individual lenders back these loans in amounts as small as $25 per lender.

Some of Kiva's benefits are that it has no credit check, and you don't even need any time in business or business revenues to qualify. Even better, there is no interest or fees charged, and you can repay with a flexible, convenient repayment plan. However, that doesn't mean that the service will accept just anyone.

Kiva favors community-minded businesses with a compelling story — after all, you need to convince individuals browsing the site to lend to your business instead of another business. Kiva says the ideal candidate for its services is socially aware and has a strong online and social media presence. It's probably a good idea to go to Kiva's website to see the types of businesses that receive funding on the Kiva platform.

Note that these loans are very small. Though Kiva offers loans as large as $15,000, startup businesses that have been in operation for less than a year are only eligible for a $1,000 loan.

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Can You Get Startup Business Loans For Bad Credit Guaranteed?

Applying for small business startup loans with bad credit can be a big disappointment if your credit is so bad or your business is so new that you don't qualify for any loans at all. The same goes for new or aspiring business owners searching for first-time business loans with no revenue yet.

Again, there is no such thing as a startup loan with guaranteed approval, especially for new businesses that can't meet minimum qualifications. However, there are still some financing options even if you don't qualify for any new business loans.

Alternative Startup Funding For Borrowers With Bad Credit

If you don't qualify for small business loans, alternative types of funding have more flexible credit score requirements. Consider the following alternatives to startup business loans for bad credit:

Small Business Credit Cards

If you aren't quite ready for a business loan, a small business credit card for bad credit can be a good way to pay for startup expenses while building your credit. Business credit cards are also an effective way to establish a business credit history and/or separate your personal credit history from your business credit history.

Corporate Cards

For new businesses registered as corporations, a corporate card is another type of business credit card that can be used to pay for business expenses. Since you are applying as a corporation, the card issuer will not check your personal credit. The caveat is you will need a high balance in your corporate bank account — for example, Amex's corporate card program for startups requires a minimum $1 million bank account balance.

Small Business Grants

A business grant is a sum of money that you do not need to repay. And since it's not a loan, no credit check is involved. Various organizations, local governments, and private companies offer small business grants, including startup business grants. However, your company will usually need to meet certain criteria to qualify; for example, your business must be woman-owned or operating in a specific city and/or industry.

Crowdfunding

In addition to crowdfunded loans, such as Kiva, other crowdfunding platforms for businesses do not require any repayment (or credit check). Depending on how the service is structured, businesses may need to offer equity in their company or provide backers with a reward related to the project they are soliciting funds for.

FAQs About Startup Small Business Loans For Bad Credit

Is it possible to get a startup loan if I have bad credit?

Yes, some online and nonprofit lenders cater to new business owners with bad credit. However, loans for borrowers with bad credit tend to carry higher interest and have shorter repayment terms compared to traditional business loans. If you lack strong business credentials, it may also be difficult for you to get a loan larger than a microloan ($50K and smaller).

Can I get a startup business loan with no credit check?

Almost every lender will at least perform a soft pull of your credit to get an idea of where you stand in terms of credit. However, depending on the type of loan you select and the lender you choose to work with, other factors — such as the performance of your business — may play a larger role in approval than your credit score.

Conventional lenders like banks will always require a credit check, but there are a few alternative options available that do not have this requirement.

Do I need collateral to get a bad credit startup loan?

No, bad credit startup loans usually don't require you to put up any specific collateral or business assets. However, most online startup loans require a UCC-1 blanket lien and/or a personal guarantee.

The blanket lien covers your business assets as a whole — meaning the lender can seize whatever business assets you do have if you stop paying on the loan. The personal guarantee is an agreement that you are personally responsible for repaying the loan even if your business dissolves or cannot make repayments.

Can I get an SBA loan with bad credit?

You usually need to have at least fair credit to get an SBA loan. The SBA has different credit score requirements for different loans, but the minimums tend to be in the 600s. For example, the SBA 7(a) loan requires a score of 640, while an SBA Microloan has a minimum of 620.

There are some exceptions, though. For example, the SBA did not require credit checks for the temporary Paycheck Protection Program (PPP) loan program, but participating lenders could pull applicants' credit and make a lending decision based on the lender's own requirements.

What is the minimum credit score for the SBA?

The SBA program with the lowest credit score requirement is SBA Microloans. These loans have a minimum credit score requirement between 620 and 640, and require collateral.

Which loan company is best for bad credit business loans?

It really depends on your needs — for example, how fast you need the money and how large of a sum you need — and your credentials, such as your credit score, your income, and what stage of growth your startup is in. If your startup is still in the "idea" stage and you just need a few thousand dollars to get off the ground, you may be limited to personal lenders. If your score is in the high 500s and your business is already making money, you'll have more options, including short-term loans and lines of credit.

To find the best lender you qualify for, be sure to read small business loan reviews to verify that a lender is reputable before you apply. Once you find some good candidates, you can apply for several loans and compare preapproval offers to see which one is best (in terms of the loan amount, interest rate, etc.).

Can I get a business loan with a 500 credit score?

It is difficult but possible to get a business loan with a 500 credit score if you work with the right lender. More to the point, it's possible to funding with a 500 credit score even if it doesn't necessarily come in the form of a loan. Merchant cash advances, accounts receivable factoring, and short-term loans often have lower credit score requirements than traditional installment loans.

How can I start a small business with no money and bad credit?

There are a number of different tactics you can take to start a business when you have no money and bad credit. This includes adopting a business strategy with very low overhead, or tapping non-traditional sources of financing. You can read more about how to start a small business with no money in our blog.

Can I get credit for my business with bad credit?

Yes, there are credit options for businesses with bad credit. These typically offset the risk of a bad credit score by looking at revenue, available assets that can be tapped for liquidity or used as collateral, and/or high interest rates.

In Summary: 10 Best Startup Small Business Loans For Bad Credit

1. National Business Capital:
   • Best Flexible Borrower Requirements
   • Minimum Credit Score: 550
   • Revenue: $10,000 per month
2. Lendio:
   • Best For Equipment Financing
   • Minimum Credit Score: N/A
   • Revenue: N/A
3. Upstart:
   • Best For No Credit
   • Minimum Credit Score: 580
   • Revenue: N/A
4. Fundbox:
   • Best Short-Term Loans For Startups
   • Minimum Credit Score: 600
   • Revenue: $100K/year
5. BlueVine:
   • Best Line Of Credit For Startups
   • Minimum Credit Score: 600
   • Revenue: $10,000 per month
6. Credibly:
   • Best Merchant Cash Advance
   • Minimum Credit Score: 500
   • Revenue: $180K/year
7. Avant:
   • Best Small Personal Loans
   • Minimum Credit Score: 580
   • Revenue: N/A
8. PayPal Working Capital:
   • Best For Startup PayPal Sellers
   • Minimum Credit Score: N/A
   • PayPal Revenue: $15K-$20K annually
9. Accion:
   • Best Microloans For Bad Credit
   • Minimum Credit Score: Varies
   • Revenue: Sufficient for repayment
10. Kiva U.S.:
    • Best Crowdfunding For Startups
    • Minimum Credit Score: N/A
    • Revenue: N/A

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An expert in personal and business loans and financial health, Chris Motola has been writing about small business finance and payments for over 5 years. He has been cited in various industry publications, including Forbes Advisor, GoBankingRates, and Medium. Chris is a graduate of the University of Central Florida.

View Chris Motola's professional experience on LinkedIn.

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Source: https://www.merchantmaverick.com/bad-credit-startup-loans/

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