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5 Best Business Loans for Bad Credit of November 2021

Online lenders provide small-business loans for borrowers with bad credit. Rates may be higher than bank loans.

Steve Nicastro, Ryan LaneApril 29, 2021

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Bad credit small-business loans are available from alternative sources, like online lenders. If your credit isn’t great, getting a loan from a bank or credit union may be difficult.

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 loans for borrowers with bad credit — defined by FICO as a score between 300 and 629 — and more information on how to qualify for financing.

How Much Do You Need?

Our picks for

600+ personal credit score

Funding options such as lines of credit and term loans may be available if your credit score is at least 600.

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Fundbox - Line of credit

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Est. APR

10.10-79.80%

Min. Credit Score

600

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

Pros

Cash can be available by the next day.
Low minimum credit score requirement.

Cons

Rates are high compared to traditional banks.

Read full review

Qualifications:

Minimum credit score: 600.
Minimum time in business: 6 months.
Minimum annual revenue: $100,000.

May fund quickly

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BlueVine - Line of credit

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Est. APR

15.00-78.00%

Min. Credit Score

600

BlueVine's line of credit provides fast working capital for short-term borrowing needs.

Pros

Cash can be available within 12 to 24 hours.
Multiple term lengths for different financing needs.

Cons

Short repayment term results in higher payment amounts.
Requires personal guarantee.
Not available in North Dakota, South Dakota or Vermont.

Read full review

Qualifications:

6-month line of credit:
Minimum credit score: 600.
Minimum time in business: 6 months.
Minimum annual revenue: $120,000.
12-month line of credit:
Minimum credit score: 600.
Minimum time in business: 6 months.
Minimum annual revenue: $120,000.

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OnDeck - Line of credit

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Est. APR

11.00-61.90%

Min. Credit Score

600

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.

Pros

Cash can be available within the same business day.
Requires low minimum credit score.
Less paperwork than most lenders.

Cons

Fixed-fee structure means early repayment will not save interest.
Requires weekly repayments.
Requires personal guarantee.

Read full review

Qualifications:

Minimum credit score: 600.
Minimum time in business: 1 year.
Minimum annual revenue: $100,000.
No bankruptcies in the past 2 years.

May fund quickly

See Your Loan Options

OnDeck - Online term loan

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Est. APR

9.00-99.00%

Min. Credit Score

600

OnDeck offers a fast term loan for small-business owners with less-than-stellar credit who want to expand.

Pros

Cash can be available within the same business day.
Requires low minimum credit score.
Less paperwork than most lenders.

Cons

Fixed-fee structure means early repayment will not save interest.
Requires frequent (daily or weekly) repayments.
Requires business lien and personal guarantee.

Read full review

Qualifications:

Minimum credit score: 600.
Minimum time in business: 1 year.
Minimum annual revenue: $100,000.
No bankruptcies in the past 2 years.

May fund quickly

Our pick for

Businesses with unpaid customer invoices

Invoice factoring can turn your unpaid customer invoices into immediate cash. Approval typically depends on the strength of your customers — such as whether they pay on time — not your personal credit.

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BlueVine - Invoice factoring

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Est. APR

15.00-68.00%

Min. Credit Score

530

BlueVine's invoice factoring can turn unpaid customer invoices into fast cash.

Pros

Finances larger invoices.
Cash can be available within the same day.
Accepts low minimum credit score and short time in business.

Cons

Not for businesses that do not invoice on net terms.
Loan amount is tied to the value of your invoices.
Dependency on customers to pay their bills on time.

Read full review

Qualifications:

Minimum credit score: 530.
Minimum time in business: 3 months.
Minimum annual revenue: $120,000.

Lowest credit score required

How Much Do You Need?

Summary of 5 Best Business Loans for Bad Credit of November 2021

Lender	Best For	Est. APR	Min. Credit Score	Next Steps
Fundbox - Line of credit See Your Loan Options with Fundera by Nerdwallet	Best for 600+ personal credit score	10.10-79.80%	600	See Your Loan Options with Fundera by Nerdwallet
BlueVine - Line of credit See Your Loan Options with Fundera by Nerdwallet	Best for 600+ personal credit score	15.00-78.00%	600	See Your Loan Options with Fundera by Nerdwallet
OnDeck - Line of credit See Your Loan Options with Fundera by Nerdwallet	Best for 600+ personal credit score	11.00-61.90%	600	See Your Loan Options with Fundera by Nerdwallet
OnDeck - Online term loan See Your Loan Options with Fundera by Nerdwallet	Best for 600+ personal credit score	9.00-99.00%	600	See Your Loan Options with Fundera by Nerdwallet
BlueVine - Invoice factoring See Your Loan Options with Fundera by Nerdwallet	Best for Businesses with unpaid customer invoices	15.00-68.00%	530	See Your Loan Options with Fundera by Nerdwallet

Can you get a business loan with bad credit?

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:

How long you’ve been in business.
What your annual revenue is.
How strong your cash flow is.
What kind of collateral you can provide.

The reasons behind your low credit score may also influence a lender’s decision. For example, it will likely be harder to get approved if a recent bankruptcy or loan default is what’s dragging your score down.

How to get a business loan with bad credit

Check your credit. Before applying for a small-business loan, check your credit to know what lenders are going to see. You can get a free 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, which can build your business credit as well.
Shop around. If you need financing now, bad credit will likely mean 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 started. By working to get the best deal possible, you’ll better position yourself for success.

Where to get a business loan with bad credit

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 lenders require a minimum personal credit score between 500 and 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 those 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 don’t have the same strict credit requirements for lending those financial institutions have. If you’re eligible for CDFI financing, you could get a competitive interest rate. Funding can be slower than online lenders, though.
Microlenders. If you have bad credit, you may be able to get a microloan for your business. Microloans typically come from nonprofits. Because profit isn’t these organizations’ primary driver, they may be more willing to work with business owners with a thin credit history. The downside of a microloan is right in its name: Funds typically top out around $50,000, which may not be enough for your company’s needs.
Your business. 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. A merchant cash advance can also let bad credit borrowers tap into their own business for financing. But this kind of loan should be a last resort, as rates can reach triple digits.

If you’re a startup with bad credit

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.

A few lenders offers 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.

Potential alternative options include business credit cards, which typically provide borrowing amounts up to $50,000. However, approval is based on your personal credit score, and you’ll need a minimum credit score of 630 to qualify for most cards.

If you need to improve your credit score, consider getting a secured personal credit card first.

These cards require a cash security deposit when you open the account. But if you use the card responsibly, you’ll improve your personal credit and get back your deposit.

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...